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Forex Course

195. Understanding The U.S. Dollar Index Numbers

Introduction

Introduction

Introduction

The U.S. Dollar Index is a measure of the value of the Dollar in respect to foreign currencies as measured by the respective exchange rates. More than half of the index value of the Dollar is measured against the Euro. The British Pound, the Japanese Yen, the Swedish Krona, the Canadian Dollar, and the Swiss Franc. It is a market on its own as well as an indicator of the U.S. dollar strength on a global level. Moreover, it can also be used as the technical analysis to determine trends of various markets.

How Is The US Dollar Index calculated?

Below is the formula to calculate USDX–

USDX = 50.14348112 × EUR/USD^(-0.576) × USD/JPY^(0.136) × GBP/USD^(-0.119) × USD/CAD^(0.091) × USD/SEK^(0.042) × USD/CHF^(0.036)

Each currency value is multiplied by its weights. When the U.S. dollar is the base currency, this comes at a positive figure. On the other hand, when the U.S. dollar is used as the quoted currency; then this would come as a negative value. Additionally, pounds and euros are only countries where the U.S. dollar is used as the base currency as they are quoted in respect of the Dollar.

How To Interpret the U.S. Dollar Index?

Similar to any currency pair, there is a dedicated chart of the U.S. Dollar Index (USDX). Additionally, the index is calculated five days a week and 24 hours a day. The U.S. Dollar Index measures the value relative to a 100.000 base.

If the index value stands at 120, this means that the U.S. dollar has witnessed 20% appreciations against other currencies in the basket. This simply implies that the U.S. dollar has strengthened in comparison to other currencies. On the other hand, if the index value shows at 70, this implies a depreciation of 30%

Final Thoughts

The U.S. Dollar Index enables traders to monitor the value of the U.S. dollar in comparison to six currencies within the bracket in a single transaction. Moreover, it also assists them to hedge the bets against risks associated with the Dollar. Investors can use this index to hedge the normal movement of currency or speculate.

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Forex Course

194. Introduction To The US Dollar Index (USDX)

Introduction

Introduction

Introduction

The U.S. dollar index is referred to as a measure of the value of the U.S. dollar, which is relative to the value of a series of currencies that are the most important trading partners of the country. The USDX is similar to other forms of trade-weighted indexes that also use the exchange rates from the leading currencies.

U.S. Dollar Index – A Brief History

In the year 1970, the U.S. Dollar Index switched between 80 and 110. This was the time when the U.S. economy was witnessing recession and rising inflation levels. With the Federal Reserve increasing interest rates to cut inflation, money flowed into the U.S. dollar, resulting in a rise in the USD index. In February 1985, the USD Index hit 164.720; this is the highest it has ever been.

However, this caused significant issues for the U.S. exporters whose goods were no longer competitive internationally. Subsequently, strong actions were taken by the U.S. government to make the currency more competitive, with five nations agreeing to manipulate the U.S. dollar in the forex markets.

This made the Dollar Index dropped by 51% over the course of four years. Since that time, the index has tracked the performance of the economy as well as liquidity flows.

Fundamentals of U.S. Dollar Index

This index is presently calculated by factoring in the exchange rates of six leading world currencies, including Euro (EUR), British Pounds (GBP), Canadian Dollar (CAD), Swiss Franc (CHF), Swedish Krona (SEK), and Japanese Yen (JPY). The biggest component of this index is the EUR, which accounts for approximately 58% of the basket. The weights of the rest of the currencies in the index include –

  • GBP (11.9%)
  • JPY (13.6%)
  • SEK (4.2%)
  • CAD (9.1%)
  • CHF (3.6%)

What Impact The Price Of The USD Index?

The USD Index is primarily impacted by the demand for and the supply of the U.S. Dollar. Related currencies of the baskets are also an important factor. These factors impact the price of each pair of currency in the formula that is being used to calculate the value of the U.S. Dollar’s value. The demand and supply of currencies are determined by monetary policies.

In the upcoming course lessons, we will be learning more about the US Dollar index. So, stay tuned. Please take the quiz below before you go. Cheers.

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Crypto Videos

Stimulus Hope Is Driving Up The Dow Jones – Should You Buy Or Short it?

https://youtu.be/LzN_bjCRLrE

https://youtu.be/LzN_bjCRLrE


Stimulus hopes drive up the Dow Jones – where next? 

Thank you for joining this Forex Academy educational video

In this session, we will be looking at the Dow Jones 30 Industrial Index and looking for indications of the next likely move.

While the United States economy is still reeling from the ongoing Covid situation, which has as a country in its grip, investors are looking long-term, buoyed on by vaccine news and hopes of a speedy back to normal recovery once it has been rolled out to the general population. 

In reality, of course, this may still take over 12 months to implement. Therefore hopes of the recovery are fuelled by my hopes that the American government will continue to support individuals and companies via a Covid-19 relief aid stimulus to help unemployed and financial relief for other individuals and those who need it.

This has been stifled somewhat by the fact that the discussions between the democrats and republicans have not yet been able to agree on how much money the state should put up. Current estimations are that a $900 billion stimulus bill may include checks for $600 for eligible adults and their independents. 

Some Republicans have asked for hand-outs of $1,200 per individual and $2400 per couple, with $500 going to children, to support families through this critical time.

The plan is that the 900 billion stimulus package will be the first of two parts, with phase one considered as an emergency relief bill, and phase two will kick in during the early part of January 2021, once that has been agreed on.

It is talk of the stimulus package, which has been keeping the Dow Jones at record highs.

This is a daily chart of the Dow Jones 30 industrial index.  We can see that since March 2020, the general trend has been a bull trend to the upside, following on from the earlier crash as the pandemic took hold in early February. The technical line numbered 1 shows the general upward trend as hopes of a V-shaped recovery fuelled investor to buy the index.

More recently, talks of an emergency stimulus package, and especially during November where investors believed a deal was imminent, saw price action move higher from this average and particularly where we see the bullish bounce from the line where we see a steady rise up to the record-breaking 30,000 level at position A. 

Talks of the stimulus package went to and fro between the democrats and republicans, with concerns of the, will they or won’t they agree on a package and where price action moved lower to the trend line at position 2, while talks stalled, and where price action itself bounced this higher trend line, marked as 2, back up at position B C  and D in an overall bias squeeze to the upside, where price continued to flirt with 30,000 and eventually where there was a significant close and open above this key level.

In this 1-hour chart, we can see that price action is seeing resistance at around 30,300.

And by adding this support line, we now have rising wedge formation clearly evident, where price action is fading to the upside, with a potential break above the 30,300 level. Should this immanent covid relief bill be agreed upon, price action could punch higher and continue with potential for the 30,300 level to become a support line and a possible move higher by 200 or 300 points.

There is so much pressure on the American government right now to come up with an agreed amount of stimulus for those who need it that it is almost impossible that nothing will happen. This is what is driving the Dow Jones Index and other US indices higher at the moment.

  

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Forex Elliott Wave Forex Market Analysis

AUDNZD: Profiting from its Intraday Triangle Pattern

The AUDNZD cross seems to start a movement in wave 3 of Minor degree labeled in green after completing its second corrective wave of the same degree, which found its bottom at 1.04181 on December 01st.

Technical Overview

The big picture of the AUDNZD cross and under the Elliott Wave perspective and illustrated in the following daily chart reveals the bullish sequence of Minor degree that began last March 09th, when the price pierced the parity level, dropping to 0.99906.

Once the price found fresh buyers, the Oceanic cross climbed in five internal movements of Minute degree, identified in black, until 1.10438, where the cross completed its first wave in green. After this completion, AUDNZD dropped in a complex corrective formation identified as a double-three pattern, which found support at 1.04181 on December 01st. From there, it bounced up to the current levels. 

On the other hand, the breakout of the short-term descending trendline that connects the end of wave ((x)), in black, with the end of wave (b), in blue, suggests the end of the second wave of Minor degree.

Short-term Technical Outlook

The intraday view unfolded in the next 2-hour chart shows the rally that remains in progress since December 01st when the cross found fresh buyers at 1.04181 suggesting further upsides in the following trading sessions.

The previous chart shows the wave (iii) movement of the Minuette degree labeled in blue, which currently looks consolidating its internal structure in a potential running triangle pattern. 

According to the Elliott Wave theory, practically all running triangle patterns tend to be confused with ending diagonals driving retail traders to open trades in the opposite direction to the current trend instead of considering the pattern as a continuation of the trend. Therefore under this scenario, our main bias remains on the bullish side. In this regard, this triangular pattern makes us think that the Oceanic cross might continue extending its movement until the potential target zone between 1.0758 and 1.0816, where the price could complete its third wave, in blue.

In summary, the AUDNZD cross completed its second wave of Minor degree subdivided in a descending three-wave sequence calling for a new upward movement in favor of the first rally, which should follow a five-wave sequence. In this context, the internal structure shows the progress in the third wave of an impulsive wave, which looks consolidating in a running triangle pattern. The potential target of the current rally is located between 1.0758 and 1.0816. On the other hand, the bullish scenario’s invalidation level is set at 1.04181, corresponding to the origin of the current upward sequence.

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Forex Videos

Forex Trading Algorithms Part 5 Elements Of Computer Languages For EA Design!

 

 

 

Trading Algorithms – The Elements of a Computer Language – Part III: Objects

 

The most striking feature of modern programming is object-oriented programming. This video will explain the underlying philosophy and why OOP is such a big deal in modern app development.

 

Procedural programming versus OOP

Traditional programming is based on procedures or functions applied to a pre-defined collection of data structures. The main procedure starts moving and modifying variables and structures to obtain an output to print or display on a screen. 

The main drawback is that most of the primary data is globally allocated and potentially modified by other application sections. Thus a change to improve or correct one section of the code may interact with other sections, potentially creating hard to detect new bugs. The maintenance of large projects based on procedural programming is a nightmare, especially when a different programmer has to do it.

 

Object-oriented programming, on the other hand, uses objects with their own inner data structures. So, code mods happen within a single self-contained object, and any new bug is limited to that object.

 

Classes

The basic unit on Object-Oriented Programming is the Class. A Class is the description of an Object. Then, several objects are to be created using that Class description, called “instances” of the Class. 

Simply put, a Class is a collection of data structures and the procedures or functions allowed for these data structures. Classes provide data and function together. 

In our real-life, we are surrounded by objects with shape and functionality, such as cars, TVs, houses, and pants. All have their intrinsic properties. A vehicle has an engine, four wheels, battery, throttle, brakes, steering wheel, doors, seats, and so forth, and all these parts are also objects. But not all cars are equal; brand, color, engine power, seat materials, etc., change. That also happens with computer objects.

A new class can be created from a parent class, with new functionality, or with changing functionality from the parent class in a process called “inheritance.”

 

An example of a class

The Bag class is just a container for other objects. We can add or take out items to and from the Bag. The main data storage is in the self.data variable. But, bear in mind that self.data is different for every new Bag object created!. We can see that the data structure of the Bag object cannot be accessed but with the supplied methods, add, sub, and show.

 

A Python financial class

A financial class can be made of around a historical OHLC data structure. Using it, we can create new information such as indicators and various stats, such as swing high/low length and duration statistics, and other information related to price analysis and forecasting.

You can see an example of what a pro-built class can do by looking at the stock-pandas class package documentation. We can see that the stock-pandas project is solely focused on the creation of a class to handle statistics and indicators for a financial data series, presenting a complete package.

As we can see, the advantages of OOP are huge. Packages can be built, which, later, can easily be versioned, updated, and expanded. The creation of apps using classes and OOP is much more straightforward, so the time needed to complete a project is shortened drastically.

Now that we have reviewed the basics of modern programming, let’s move back to trading algorithms.

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Forex Fundamental Analysis

NZD/USD Global Macro Analysis – Part 1 & 2

Introduction

Introduction

Introduction

The global macro analysis of the NZD/USD pair will involve the endogenous and exogenous analyses of the US and New Zealand economies. The endogenous analysis will focus on domestic macroeconomic factors that drive the economy. The exogenous analysis will focus on economic indicators that comprehensively compare both the US and New Zealand economies.

Ranking Scale

Both the endogenous and exogenous factors will be ranked on a scale of -10 to +10. A negative ranking for the endogenous means that the factor had a negative impact on either the currency, while a positive ranking had a bullish impact on the currency.

Similarly, when the exogenous factor is negative, it has a bearish impact on the currency pair, while a positive ranking means it had a bullish impact.

Summary – USD Endogenous Analysis

From the above table, a clear deflationary effect can be seen on the USD currency and implies that USD has depreciated in its value since the beginning of 2020. For the complete USD Endogenous Analysis, please check here.

Summary – NZD Endogenous Analysis

The NZD endogenous analysis has a total score of 4. This shows that the NZD appreciated in 2020.

  • New Zealand Inflation Rate

The CPI is the most commonly used measure of inflation in New Zealand. Here are the top categories included in the CPI: Housing with a weight of 24.2%; food and non-alcoholic drinks 18.8%; transportation 15%; recreation 9.4%; alcoholic drinks 7%; clothing, household goods and services, health, and education all have a combined weight of 18.2%.

In September 2020, New Zealand CPI increased by 0.7%. Based on the correlation with the GDP, we assign a score of -1.

  • New Zealand Unemployment Rate

This rate shows the number of New Zealand’s working population out of work and actively looking for gainful employment. As an economic indicator, it can be used to show the economy’s ability to add new jobs to the market.

In Q3 of 2020, the New Zealand unemployment rate increased to 5.3% from 4% in Q2. This shows that the labor market is yet to recover from the economic shocks of the coronavirus pandemic. Based on correlation analysis, we assign a score of -5.

  • New Zealand Manufacturing PMI

This is an index that measures the growth in the manufacturing sector in New Zealand. It is a composite of new orders, employment, inventories, and orders delivered from the manufacturing sector. When the index is above 50, it means that the manufacturing sector in New Zealand is expanding. The sector is seen to be contracting when the index is below 50.

In October 2020, the index declined to 51.7 from 54. However, the index is above the pre-coronavirus levels. That implies the manufacturing sector is recovering swiftly. Based on the correlation analysis with GDP, we assign it a score of 3.

  • New Zealand Business Confidence

In any economy, business confidence goes hand-in-hand with business confidence. In New Zealand, the business confidence index is based on a survey of about 700 businesses. The index is the difference between the number of businesses that anticipate economic improvements and those that expect the economic conditions will decline. The index covers export intentions, profit expectations, employment intentions, activity outlook, and capacity utilization.

In November 2020, the ANZ Business Confidence was -6.9 compared to -15.7 in October. Although in the negative territory, the November reading is the highest since September 2017. This shows that more businesses are becoming optimistic about the future operating environment, mostly thanks to the aggressive expansionary monetary and fiscal policies.

Based on correlation analysis with the GDP, we assign ANZ business confidence a score of 4.

  • New Zealand Retail Sales

In New Zealand, retail sales data is aggregated quarterly. It measures the change in the value of goods and services purchased by households. Remember that consumer expenditure is the main driver of economic growth, which makes the retail sales data a leading indicator of GDP growth.

In Q3 of 2020, the New Zealand retail sales increased by 28% from a drop of 14.6% and 1.2% in Q2 and Q1, respectively. The 28% increase is the largest quarterly increase in 25 years. The YoY retail sales increased by 8.3% in Q3 compared to a 14.2% drop in Q2. Based on our correlation analysis, we assign the New Zealand retail sales a score of 6.

  • New Zealand Consumer Confidence

In New Zealand, consumer confidence tends to correlate with households’ willingness to spend in the economy. The Westpac McDermott Miller Consumer Confidence Index gauges the optimist of New Zealand households regarding the economy. The index covers households’ views on their finances, purchases in the economy, and the overall economy.

A score of above 100 shows an increasing level of optimism, while below 100 shows increasing pessimism.

In Q3 of 2020, the New Zealand consumer confidence index dropped to 95.1 from 97.2 in Q2 and 104.2 in Q1. Q3 reading is the lowest in New Zealand since 2008. Based on its correlation with GDP, we assign a score of -4.

  • New Zealand Government Net Debt to GDP

Gross national Debt to GDP helps both local and foreign creditors gauge a country’s ability to service its debt. This indicator shows the level at which the domestic economy is leveraged. A lower ratio is preferable since it means that the country has a higher GDP compared to its debt. This means that it can be able to access cheap debt in the future.

In the 2018/2019 fiscal year, the New Zealand government debt to GDP dropped to 19% from 19.6% in the 2017/2018 fiscal year. In 2020, the New Zealand government debt to GDP is projected to increase to 27% on account of the government’s aggressive spending to ease the economic pressure from the coronavirus pandemic. Based on correlation analysis with GDP, we assign New Zealand government debt to GDP a score of 1.

In the very next article, let’s analyze the exogenous indicators and forecast if this currency pair seems to be bullish or bearish in the near future.

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Forex Videos

Forex Trading Algorithms Part 4 Elements Of Computer Languages For EA Design!

https://youtu.be/1DOwYu8Ldbs

https://youtu.be/1DOwYu8Ldbs

Trading Algorithms – The Elements of a Computer Language – Part II

 

A computer program is a combination of data structures and a set of instructions or commands in the form of functions that process the data structures to construct a solution or solutions.

 

Control flow tools

To efficiently process information, a high-level programming language owns specific instructions to do mathematical operations, check for conditions, and control data flow.

 

The if Statement:

The if statement is the most basic flow-control instruction. It allows us to check for conditions or the validity of a statement.

for example, 

if x > 0 checks for the variable x being higher than zero. If it is zero or negative, it will deliver a False value. If over zero, it will provide a True condition.

The if statement, combined with the else statement, handles the flow of the information. If/else is mostly similar in all languages. ( Example taken from docs.python.org 

Iterators

Iterators are used to move through the components or a data structure, such as lists or arrays. There are several ways to iterate, some language-specific, but most are present in all languages.

 

 The for statement

The for statement is used to do an orderly iteration on an array or list. In C++, it has the following structure:

for (initialization; condition; increase) . Initialization is the starting point; condition defines the endpoint, and increase sets the step.

CPP example, source cplusplus.com

Python’s for is more versatile and simple. To loop through a list is straightforward (taken from docs.python.org):

But we can use the range() function to do a similar C++ for (taken from docs.python.org):

The While statement

The while statement creates a computer loop that is exited only after a certain condition is met:

For example, the above while loop appends the Fibonacci numbers up to n, storing them in the fibo list. The loop breaks only when a is bigger than n.

 

Function definition

In a computer app, the code repeats itself most of the time, sometimes the values may be different, but the basic computational structure is the same. To organize these computational structures, all computer languages have functions. 

In C++ a funtion is defined with the following structure:

<out type> function name (<type> parameter1, …. <type> parameter n){

body

}

The out type is the output type of the function. It can be an integer, a floating-point, or any other data structure, pointer, or no output at all.

The parameters are inputs to the function but can be used to modify an external structure as well.

In Python, the definition is simpler. 

def function_name ( parameter1…parameter n):

body

If the function returns a value or data structure, it is delivered through a return statement.

The following example shows the fib function, which computes the Fibonacci numbers up to the input parameter. The results of the Fibonacci computations are stored in the fibo list, which, after exiting the while loop, is returned. The variable res is assigned the output of the fib function and printed. Please note that the last two statements are not part of the fib function.

The last introductory article on high-level languages will talk about classes, objects, and object-oriented programming.

Once we have completed this basic wrap-up on programming language features, we’ll start studying trading-focused algorithms in the coming videos.

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Forex Videos

US Stock Indices – Which Currencies Should You Be Buying Right Now!

https://youtu.be/v7XW-1ytzWs

https://youtu.be/v7XW-1ytzWs


US stock indices – Bad news is the new good news!

Thank you for joining this forex academy educational video.

In this session we will be looking at us stock indices,  and trying to reason why they are at record highs when the US economy is faltering due to the ongoing coronavirus pandemic.

This is a chart of the S&P 500 index which measures the stock performance of 500 of the largest companies listed on the United States stock exchanges it is a commonly follow equity index.

On Friday the 4th of December 2020 the index rose to an all-time record high currently sitting at 3699.  Remarkable considering the unit United States is still in the grip of the coronavirus pandemic and where hospitals are currently overrun with victims of the disease across the United States, and especially New York and California, where ICU capacity is down to just 15%, and where the governor of California has recently said he expects large areas of the state of California to be locked down within the next few days affecting businesses and individuals’ livelihoods.

 In an almost identical trajectory since march the Dow Jones industrial average index has also reached record highs and is holding ground above the key 30,000 level.  This is simply staggering bearing in mind millions of people are still unemployed and gross domestic product and have a key indicators show that the American economy is not showing a V-shaped recovery, as was expected and hoped for by the federal reserve.

The NASDAQ Composite index and Barrons 400 also simultaneously hit all time highs. A rare occurrence.

Conversely the US dollar index, or DXY, which is a weighted index against major currencies including the euro, British pound, and yen, over the same period since the middle of march 2020 has been falling from its peak of 103.00, to 90.7 at the time of writing.

Traders have been using the dollar index as any inversely correlated technical analysis tool in particular when trading the Dow Jones 30 industrial average.

One of the reasons for this is that as the federal reserve pour billions of dollars into the system many of these are being used by institutions, traders, speculators and investors to buy stocks and shares in the hope that the US economy will quickly recover once the pandemic is under control within the United States and things revert to normal, and where history tells us that many stock indices go on to recover over 10% of their market value following previous pandemics, including Sars, and asian bird flu.

 It was no coincidence that these levels were reached after the November us non farm payroll where the unemployment rate fell to 6.7% from 6.9% and where 245,000 jobs were added, and although just year ago these types of numbers would have been seen as fantastic for the American economy,  the November key jobs report, where analyst expectations were  for over 600,000 jobs to have been added, was seen as disappointing.

 

And so while the US economy looks to be stalling and payroll numbers are weak and yet there is such optimism by investors which is keeping the US stock market buoyant. So what is going on what is really behind this?  Certainly, the US dollar seems to be reflective of the poor state of affairs with the United States economy.  And as previously alluded to, some of these dollars are finding their way back into the stock market, even though some major American corporations are lagging. The news that the covid vaccine will soon be rolled out across the globe has encouraged investors, but the truth may be that the market is expecting that the woeful economic data will simply force congress to quickly pass a stimulus bill before the Christmas break, and this would effectively prop up the American economy providing a much-needed lifeline for workers and businesses and where some of the anticipated $900 billion being talked about as a potential amount which could be agreed by both the democrats and republicans would likely maintain the buoyancy in the stock markets. The flip side of the stimulus is that on a supply and demand basis the influx of dollars will likely weigh on the dollar index providing counter currencies such as the Euro, Canadian dollar and the Australian and New Zealand dollars a lift.    

 

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Forex Course

193. Summary – Carry Trading

Introduction 

Introduction 

Introduction 

Carry trade involves borrowing or selling of an asset that has a low-interest rate, for the purpose of using the fund proceeds to make another investment with a higher rate of interest. By paying a lower rate of interest on assets and collecting a higher interest rate from another asset, traders make a difference in the interest rate.

Currency Carry Trading – How Does It Work?

In currency carry trading, the trader borrows one currency known as the borrowing fund. And, then they use this fund to purchase another currency. The traders pay low-interest rates on the borrowed currency while collecting a higher interest rate on the purchasing currency. This type of trade gives traders an effective alternative to purchasing low and sell high, which is difficult to do on other trading options. AUD/JPY and NZD/JPY are the most common currency pairs to carry trade.

Opportunities & Risks Involved

The most profitable time to perform a carry trade is when the country’s central banks are increasing or about to raise the interest rate. Low volatility situations are also profitable for these trades as traders are more likely to take more risks. Granted that the value of the currency does not fall, traders are likely to get a good amount.

There is a big risk associated with currency carry trading, primarily because of the uncertainties associated with the exchange rate. When high leverage levels are used in this trade, it implies that even small movement in the exchange rates can result in a substantial loss if the traders fail to hedge their positions properly.

Risk Management 

While lucrative, carry trading comes with its own share of risks. This is because currencies are prone to volatility. Moreover, the negative market sentiment of the traders within the currency market can also have a substantial impact on carry pair currencies. Without improper risk management, traders could end up bearing a high degree of risk. The best way to avoid risk in a carry trade is when the market sentiment and fundamentals support them.

Final Thoughts

If you are looking to invest in a carry trading, the first steps are to select the most lucrative broker vs currency pair combination. The charges of brokers vary significantly across various currencies. Therefore, it is important to ensure that the trade offers an effective risk-adjusted return. Cheers.

Categories
Forex Signals

Gold Trade Choppy – Can Upward Channel Underpin? 

During Friday’s Asian trading session, the yellow metal prices failed to extend their overnight winning streak. They edged lower around the $1,880 level mainly due to the upbeat market sentiment, which tends to undermine the yellow-metal prices as investors continuing a retreat from the safe-haven asset after progress in U.S. stimulus measures and Brexit talks. Elsewhere, the reason behind the risk-on market sentiment could also be associated with the expectations for global economic recovery on potential coronavirus vaccines. 

During Friday’s Asian trading session, the yellow metal prices failed to extend their overnight winning streak. They edged lower around the $1,880 level mainly due to the upbeat market sentiment, which tends to undermine the yellow-metal prices as investors continuing a retreat from the safe-haven asset after progress in U.S. stimulus measures and Brexit talks. Elsewhere, the reason behind the risk-on market sentiment could also be associated with the expectations for global economic recovery on potential coronavirus vaccines. 

During Friday’s Asian trading session, the yellow metal prices failed to extend their overnight winning streak. They edged lower around the $1,880 level mainly due to the upbeat market sentiment, which tends to undermine the yellow-metal prices as investors continuing a retreat from the safe-haven asset after progress in U.S. stimulus measures and Brexit talks. Elsewhere, the reason behind the risk-on market sentiment could also be associated with the expectations for global economic recovery on potential coronavirus vaccines. 

In contrast to this, the widespread rise in the COVID-19 cases from the U.K., U.S., and Europe keeps challenging the market risk-on mood, helping the bullion prices limit their deeper losses. Apart from this, the US-China long-lasting tussle is also questioning the market upside momentum, which also caps further downside for the gold. Besides this, the broad-based U.S. dollar weakness has also played its major role in supporting the gold prices as the price of gold is inversely related to the price of the U.S. dollar. The yellow metal is currently trading at 1,883.14 and consolidating in the range between 1,878.60 – 1,886.06.

The news about vaccine rollouts was supporting the market trading sentiment. In the meantime, the progress on both Brexit trade talks and the latest U.S. stimulus measures also boosted the market trading sentiment, which tends to undermine the safe-haven metal prices. As per the latest report, House Speaker Nancy Pelosi said she hopes to receive the final legislative text on the deal later on Thursday. Whereas, President Donald Trump said by a tweet that stimulus talks were looking good. However, the lawmakers are now confident to approve the stimulus before the year-end. Additionally, the market trading sentiment was supported by the on-going hopes of the coronavirus vaccine. Thus the positive tone surrounding the market trading sentiment was seen as one of the key factors that kept the gold prices under pressure. 

At the USD front, the broad-based U.S. dollar failed to stop its long bearish bias and dropped towards its worst week in a month as demand for the safe-haven assets declined amid progress toward agreeing U.S. fiscal stimulus. It is worth mentioning that the U.S. dollar was down 1.2% for the week so far and has dropped by 12.7% from a 3-year peak in March, falling to 89.862, just above a 2-and-a-half-year low seen on the previous day. Besides, the U.S. dollar losses could also be associated with Powell’s dovish comments on inflation. The U.S. Federal Reserve’s promised to keep interest rates low until an economic recovery is secure. However, the U.S. dollar losses helped the yellow-metal prices limit its deeper losses as the price of gold is inversely related to the U.S. dollar price.

In contrast to this, the growing worries over the resurgence of the coronavirus pandemic have been destroying the hopes of the global economic recovery, which keeps challenging the market trading sentiment and help the yellow-metal prices to limit their deeper losses. On the other hand, the long-lasting tussle between the United States and China remains on the cards as the U.S. continuously imposing sanctions on Beijing. This, in turn, added further questions around the market trading sentiment and became the key factor that kept the lid on any additional losses in the safe-haven metal prices.

Looking ahead, the market traders will keep their eyes on U.K. Retail Sales m/m, which are scheduled for publicity later in the day. Meanwhile, the German PPI m/m data will also be key to watch. Apart from this, the updates surrounding the Brexit, virus, and U.S. stimulus package will not lose their importance. 



Daily Support and Resistance

S1 1807.17

S2 1827.65

S3 1840.79

Pivot Point 1848.13

R1 1861.27

R2 1868.61

R3 1889.09

The yellow metal gold is trading in between a tight range of 1,884 – 1,880 mark. Gold retraced downward to complete 38.2% Fibonacci level of 1,876. On the daily timeframe, gold has formed an upward channel supporting gold around 1,874 level along with a resistance level of 1,894 and 1,910 level. The 50 periods EMA holds around 1,864, suggesting an upward trend in gold; however, we are not opening a buying trade yet as the MACD forms histograms below 0, supporting a selling trend. Let’s consider taking a buying trade over the 1,874 level today. Good luck! 

 

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Forex Signals

USD/CAD Faces Double Top Resistance – A Trade Plan to Follow!  

The USD/CAD pair was closed at 1.27217 after placing a high of 1.27504 and a low of 1.26884. The currency pair USD/CAD dropped on Thursday amid the rising crude oil prices and the US dollar weakness. The USD/CAD pair came back to declining momentum after reversing from Wednesday’s high above 1.2790. The Canadian dollar benefited from a weaker US dollar and rising crude oil prices on Thursday that dragged the currency pair USD/CAD on the downside. On Thursday, the US dollar was weak across the board amid the combination of rising hopes for US stimulus, a rising number of coronavirus cases, increased bond purchases by Fed, and the disappointing jobs report from the US labor department.

The USD/CAD pair was closed at 1.27217 after placing a high of 1.27504 and a low of 1.26884. The currency pair USD/CAD dropped on Thursday amid the rising crude oil prices and the US dollar weakness. The USD/CAD pair came back to declining momentum after reversing from Wednesday’s high above 1.2790. The Canadian dollar benefited from a weaker US dollar and rising crude oil prices on Thursday that dragged the currency pair USD/CAD on the downside. On Thursday, the US dollar was weak across the board amid the combination of rising hopes for US stimulus, a rising number of coronavirus cases, increased bond purchases by Fed, and the disappointing jobs report from the US labor department.

The USD/CAD pair was closed at 1.27217 after placing a high of 1.27504 and a low of 1.26884. The currency pair USD/CAD dropped on Thursday amid the rising crude oil prices and the US dollar weakness. The USD/CAD pair came back to declining momentum after reversing from Wednesday’s high above 1.2790. The Canadian dollar benefited from a weaker US dollar and rising crude oil prices on Thursday that dragged the currency pair USD/CAD on the downside. On Thursday, the US dollar was weak across the board amid the combination of rising hopes for US stimulus, a rising number of coronavirus cases, increased bond purchases by Fed, and the disappointing jobs report from the US labor department.

The ADP Non-Farm Employment Change in November came in as 40.8K and supported the Canadian dollar that resulted in the declining USD/CAD prices on Thursday. From the US side, at 18:29 GMT, the Philly Fed Manufacturing Index in December dropped to 11.1 against the expected 20.1 and weighed on the US dollar and added further losses in the USD/CAD pair. At 18:30 GMT, the Unemployment Claims from last week advanced to 885K against the expected 817K and weighed on the US dollar, and supported the USD/CAD pair’s downside momentum. For November, the Building Permits advanced to 1.64M against the expected 1.55M and supported the US dollar, and capped further downside in the USD/CAD pair. The Housing Starts in November remained flat as expected 1.55M.

Meanwhile, the greenback was weak across the board as the total number of coronavirus cases surpassed about 17M in the US and weighed on the local currency. The rising hopes for the US stimulus also added in the US dollar pressure as the Democrats and Republicans were moving closer to reach a deal by the end of this week. Furthermore, the Federal Reserve’s latest decision to increase its bond purchases to support the economy through the second wave of the pandemic also added pressure on the US dollar and dragged the USD/CAD prices on the downside.

Furthermore, the WTI crude oil prices also increased on Thursday and reached $48.58 per barrel, supporting the commodity-linked currency Loonie. The strong Loonie then ultimately added further losses in the USD/CAD pair.


Daily Technical Levels

Support Resistance

1.2694 1.2790

1.2646 1.2838

1.2597 1.2886

Pivot Point: 1.2742

The USD/CAD pair’s technical side is extending double top resistance at 1.2766 area, and bullish crossover of this can lead USD/CAD price further higher until the next resistance level of 1.2789 level. On the lower side, the support holds around 1.2740 and 1.2709 level. The 50 periods EMA is supporting buying trend. Thus it may extend upward movement until 1.2790 level upon the breakout of 1.2766 support. Overall, the market is lacking volatility as we are heading towards the holiday session. Let’s consider staying bullish over 1.2766 resistance and selling below the 1.2740 support level. Good luck! 

Categories
Forex Elliott Wave Forex Technical Analysis

EURJPY Consolidates Expecting Further Upsides

Technical Overview

Technical Overview

Technical Overview

The EURJPY cross consolidates in the extreme bullish sentiment zone, suggesting a bullish continuation of the strong upward movement developed in early December.

The following daily chart exposes the EURJPY cross developing a consolidation pattern, which looks like a flag pattern bounded between 125.77 and 126.70. According to the chartist analysis, the formation suggests the continuation of the previous movement. In this case, the cross could extend its gains surpassing the next resistance corresponding to the 52-week high located at 127.075.

The mid-term overview for the EURJPY cross reveals its primary trend plotted in blue, supporting a rally that remains in progress since the price confirmed its bottom at 114.397 touched on last May 07th. The secondary trend traced in green and minor trend drawn in black supports the price acceleration, which currently consolidates carrying to expect the bullish continuation for the following trading sessions.

Technical Outlook

The big picture for the EURJPY cross under the Elliott wave perspective unfolded in the next 12-hour chart shows the incomplete corrective rally corresponding to wave ((b)) of Minute degree labeled in black. This corrective rally remains in progress since the price found fresh buyers at 121.617 on last October 29th and could reach new yearly highs.

The upper degree structure of the EURJPY cross illustrated in the previous chart exposes the progress in wave B of Minor degree labeled in green, which began when the cross completed its wave A at 127.075 on last September 01st. Currently, the price advances in its wave ((b)) in black. Likewise, its internal structural series shows the development in the wave (c) of Minuette degree labeled in blue, which at the same time, looks starting to develop the wave v of Suminuette degree identified in green.

In this context, the EURJPY cross could extend its gains toward the potential target zone bounded between 126.96 until 128.08, where the cross could find fresh sellers expecting to drag the price to new lows developing the wave ((c)) in black. 

In this regard, if the price confirms its new bearish leg, the cross could complete the third segment of wave B in green. On the other hand, considering both the alternation principle and the wave ((a)) and ((b)) looks extended in terms of time, the wave ((c)) could be a sharp decline.

In conclusion, the EURJPY cross moves mostly upward in a corrective rally that belongs to wave ((b)), corresponding to the second segment of the upper degree wave B. If the price breaks the sideways consolidation structure developed since early December, the cross could strike the potential target zone between 126.96 and 128.08. Likewise, the invalidation level of the bullish scenario locates at 125.130.

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Forex Signals

AUD/USD Ascending Triangle Pattern Support – Buying Setup Looms! 

The AUD/USD closed at 0.76263 after placing a high of 0.76393 and a low of 0.75668. The AUD/USD rose above the 0.76300 level on Thursday to its highest level since June 2018 amid the broad-based weakness of the US dollar and the rising risk sentiment in the market. The risk-sensitive Aussie benefited from the market’s broadly positive risk appetite that raised the Wall streets’ main indexes added in the gains of AUD/USD pair. The S&P 500 and Nasdaq Composite indices hit an all-time high on Thursday and added in the risk sentiment that gave strength to risk perceived Aussie.

The AUD/USD closed at 0.76263 after placing a high of 0.76393 and a low of 0.75668. The AUD/USD rose above the 0.76300 level on Thursday to its highest level since June 2018 amid the broad-based weakness of the US dollar and the rising risk sentiment in the market. The risk-sensitive Aussie benefited from the market’s broadly positive risk appetite that raised the Wall streets’ main indexes added in the gains of AUD/USD pair. The S&P 500 and Nasdaq Composite indices hit an all-time high on Thursday and added in the risk sentiment that gave strength to risk perceived Aussie.

The AUD/USD closed at 0.76263 after placing a high of 0.76393 and a low of 0.75668. The AUD/USD rose above the 0.76300 level on Thursday to its highest level since June 2018 amid the broad-based weakness of the US dollar and the rising risk sentiment in the market. The risk-sensitive Aussie benefited from the market’s broadly positive risk appetite that raised the Wall streets’ main indexes added in the gains of AUD/USD pair. The S&P 500 and Nasdaq Composite indices hit an all-time high on Thursday and added in the risk sentiment that gave strength to risk perceived Aussie.

The dovish comments from Chairman of Federal Reserve Jerome Powell reassured market participants that the Fed’s ultra-accommodative monetary policy stance was not going anywhere anytime soon. This news also added in the risk sentiment, supported the risk-sensitive Australian dollar, and pushed the AUD/USD pair higher.

Furthermore, the UK and EU prospects reaching a deal before the end of the year as the EU parliament had given the deadline to get an agreement before 20th December also increased and supported the risk perceived Aussie and added in the upward trend of the AUD/USD pair.

On the data front, at 05:30 GMT, the Employment Change in November raised to 90.0K against the expected 40.9K and supported Aussie and added in the gains of AUD/USD pair. In November, the Unemployment Rate also decreased to 6.8% against the forecasted 7.0% and supported the Australian dollar and supported the upward momentum of the AUD/USD pair.

From the US side, at 18:29 GMT, the Philly Fed Manufacturing Index in December fell to 11.1 against the projected 20.1 and weighed on the US dollar and added AUD/USD pair gains. At 18:30 GMT, the Unemployment Claims from last week raised to 885K against the estimated 817K and weighed on the US dollar and supported the AUD/USD pair’s an upward trend. For November, the Building Permits surged to 1.64M against the forecasted 1.55M and supported the US dollar that capped further gains in AUD/USD pair. The Housing Starts in November remained flat as anticipated 1.55M.

The greenback was weak across the board on Thursday as the US Dollar Index (DXY) fell to its lowest since April 2018, below 90 levels to 89.7. The US dollar weakness was due to many factors, including the rising prospects of reaching a deal between Democrats and Republicans over the second round of the US stimulus bill. 

The US dollar was also weak because of the rising number of coronavirus cases in many US states despite the vaccine rollout and lockdown. The reports suggested that the total number of coronavirus cases in the US reached 17M and made the country the hardest-hit country in the world by the pandemic. Furthermore, the Federal Reserve’s latest decision to extend its bond purchases program also added pressure on the greenback that ultimately affected the movement of the AUD/USD pair. All these factors combined and weighed on the US dollar on Thursday that added strength in the currency pair AUD/USD pair.


Daily Technical Levels

Support Resistance

0.7550 0.7592

0.7542 0.7606

0.7509 0.7633

Pivot point: 0.7565

On the technical front, the AUD/USD is trading slightly bullish at 0.7590, facing immediate resistance at the 0.7640 level. Bullish crossover of this level can extend upward trend until the next target level of 0.7680. However, failure to break above the 0.7680 level can extend selling moves until the support area of the 0.7580 AND 0.7545 level. The 50 periods EMA is suggesting a buying trend, but the MACD is suggesting a buying scenario. Thus, we should look for buying trades over the 0.7580 level. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, December 18 – Top Trade Setups In Forex – German IFO Business Climate in Focus! 

On Friday, the fundamental side-eyes will remain on the German Ifo Business Climate figures, which are expected to drop from 90.7 to 90.2 along with the current account data, which is likely to drop from 25.2 B to 22.6B. Both of these figures extend bearish pressure on the Euro. Later, the Canadian retail sales will be in focus as it may drive some price action in the Canadian pairs.

On Friday, the fundamental side-eyes will remain on the German Ifo Business Climate figures, which are expected to drop from 90.7 to 90.2 along with the current account data, which is likely to drop from 25.2 B to 22.6B. Both of these figures extend bearish pressure on the Euro. Later, the Canadian retail sales will be in focus as it may drive some price action in the Canadian pairs.

On Friday, the fundamental side-eyes will remain on the German Ifo Business Climate figures, which are expected to drop from 90.7 to 90.2 along with the current account data, which is likely to drop from 25.2 B to 22.6B. Both of these figures extend bearish pressure on the Euro. Later, the Canadian retail sales will be in focus as it may drive some price action in the Canadian pairs.


 

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.22679 after placing a high of 1.22725 and a low of 1.21897. EUR/USD pair extended its gains on Thursday and peaked in April 2018, amid the broad-based U.S. dollar weakness and the rebound of the Eurozone economy. The U.S. dollar weakness was derived from various factors, including rising hopes that the coronavirus relief bill will release soon, the dovish comments from Powell post-meeting, and the soft U.S. labor market data on Thursday. 

The Democrats and Republicans were close to reaching a deal over a new $900 billion proposal, including $600-$700 in paychecks and unemployment benefits. The U.S. House Speaker Nancy Pelosi has even said that it might be possible that U.S. lawmakers will have the agreement in writing by the end of Thursday. These rising hopes for the U.S. stimulus bill added pressure on the U.S. dollar that ultimately supported the EUR/USD pair’s upward movement.

Powell emphasized that the Fed was following outcomes-based policies, which means if progress slows toward achieving those outcomes, then-Fed could step up its asset purchases. Powell’s dovish comments weighed on the U.S. dollar and supported rising EUR/USD prices on Thursday. Furthermore, on Thursday, the soft labor market data weighed on the U.S. dollar as the Unemployment Claims from last week surged to 885K. The weak U.S. dollar because of rising unemployment claims also supported the upward momentum in EUR/USD pair on Thursday.

On the data front, at 15:00 GMT, the Final CPI for the year in November remained flat at -0.3%. The Final Core CPI from Eurozone in November also remained as expected at 0.2%. From the U.S. side, at 18:29 GMT, the Philly Fed Manufacturing Index in December declined to 11.1 against the projected 20.1 and weighed on the U.S. dollar and supported EUR/USD prices. At 18:30 GMT, the Unemployment Claims from last week surged to 885K against the projected 817K and weighed on the U.S. dollar. For November, the Building Permits surged to 1.64M against the projected 1.55M and supported the U.S. dollar. The Housing Starts in November remained flat as projected 1.55M.

The Eurozone economy was rebounded as suggested by the December Eurozone’s Composite PMI that rose above 49 levels compared to expected 45.3 and supported the single currency. However, the Eurozone market confidence was tempered by the news that Germany, the largest Eurozone economy, would re-enter lockdown in January to curb coronavirus spread.

Meanwhile, the global economic outlook continued to improve following the news that Europe will be rolling out coronavirus vaccines. The E.U. Commission chief Ursula von der Leyen said that the coronavirus vaccination would start from December 27 in Austria, Germany, and Italy. The Health Minister Jens Spahn said that if the approval comes as planned, Germany will start vaccination on December 27. The potential vaccine rollout in Europe raised the Eurozone economy’s outlook and supported the single currency Euro and added the EUR/USD pair’s gains.

Daily Technical Levels

Support   Resistance

1.2143      1.2231

1.2090      1.2266

1.2055      1.2320

Pivot point: 1.2178

EUR/USD– Trading Tip

The EUR/USD bullish bias continues to drive an upward movement at 1.2245, and continuing an upward trend is likely to be continued. On the 4 hour timeframe, the EURUSD has entered the overbought zone, and it has completed 23.6% Fibonacci retracement at the 1.2240 level. A bearish breakout of 1.2240 can send the EUR/USD pair towards a 38.2% Fibo level of 1.2214. The odds of buying seems strong over the 1.2214 level today.

GBP/USD – Daily Analysis

 The GBP/USD pair was closed at 1.35833 after placing a high of 1.36244 and a low of 1.34950. GBP/USD pair extended its gains for the third consecutive day on Thursday and peaked since May 2018 due to broad-based U.S. dollar weakness. The British Pound pared some gains on Thursday after the U.K. Prime Minister Boris Johnson said that it was likely that a deal would not be reached until the European Union eased its stance over key sticking issues, including fishing rights.

Johnson poured cold water on the deal’s hopes, saying that it looked very likely that the agreement will not be finalized until the European Union shifts its position substantially. This update came in the right after the positive comments from European Commission President Ursula von der Leyen, who said that the progress in trade negotiations was seen.


Despite the hints of possible progress on a post-Brexit trade deal, PM Johnson has not shied away from his views that the possible outcome for the U.K. to leave the E.U. was without a deal. In this scenario, the U.K. and E.U. will follow the terms and conditions under the World Trade Organization that would not be good for both nations. The European Parliament has given Brexit negotiators until December 20 to strike a deal to allow enough time to ratify a potential agreement before the end of the U.K.’s transition period to leave the E.U.

Furthermore, on Thursday, the Bank of England kept interest rates at the lowest level on record after warning that rapid growth in coronavirus infections will deliver a bigger hit to the U.K. economy than expected in the final months of 2020. The official interest rate was kept unchanged at 0.1% by BoE, while the bank also left the Q.E. bond-buying program unchanged at 895 billion pounds after pumping an additional 150 billion pounds into the economy last month.

The bank acknowledged that against a backdrop of soaring coronavirus infections amid the second wave of the pandemic has forced the government to launch tier-3 restrictions in England and tighter control over Scotland, Wales, and Northern Ireland that has put the economy under pressure. The bank projected that the GDP of the U.K. in the final three months of 2020 would contract by a little over 1%, which means that national output for 2020 will be 11% below 2019, and it will be the biggest recession in 300 years. These dovish comments from the Bank of England removed some of the GBP/USD pair’s daily gain on Thursday.

On the data front, at 17:00 GMT, the Asset Purchase Facility from Great Britain in December remained flat at 895B. 

From the U.S. side, at 18:29 GMT, the Philly Fed Manufacturing Index in December fell to 11.1 against the anticipated 20.1 and weighed on the U.S. dollar and supported the GBP/USD pair. At 18:30 GMT, the Unemployment Claims from last week rose to 885K against the anticipated 817K and weighed on the U.S. dollar, and added further gains in GBP/USD pair. For November, the Building Permits rose to 1.64M against the anticipated 1.55M and supported the U.S. dollar. The Housing Starts in November remained flat as anticipated 1.55M.  The U.S. dollar was weak across the board as the hopes for the second round of stimulus bills raised as the Democrats and Republicans were coming closer to reach a $900 billion proposal that would include $600 to $700 paychecks and unemployment benefits. The rising hopes that U.S. stimulus will reach an agreement soon weighed on the U.S. dollar and added in the gains of GBP/USD.

The U.S. dollar was also weak because of the rising number of coronavirus cases in the U.S. despite the vaccine rollout. According to Johns Hopkins University, the U.S. confirmed 247,403 new coronavirus cases on Wednesday, and the number of Americans’ deaths was recorded as 3656 in a single day. Meanwhile, the risk perceived the latest improvement in risk sentiment also supported British Pound after the hopes of another vaccine approval rose. A vaccine by Moderna that will offer about 94% protection against the coronavirus was set to get emergency authorization as early as this week by US FDA. On Thursday, a panel of 22 members of experts met to discuss the efficacy and potential side effects of Moderna’s vaccine. However, the American public will start receiving vaccine shots possibly after months, and in the meantime, the hospitals across the country will be caring for the coronavirus patients. These rising optimism raised the hopes that global economic recovery will reach soon and supported the risk sentiment that added strength in Sterling and helped GBP/USD pair to continue its upward movement.

Daily Technical Levels

Support   Resistance

1.3442      1.3562

1.3378      1.3618 

1.3322      1.3683

Pivot point: 1.3498

GBP/USD– Trading Tip

The GBP/USD is trading at 1.3550 level, facing an immediate support level of 1.3518 level. This support level is extended by an upward trendline, which can be seen in the 4-hour timeframe. On the higher side, the pair can extend the buying trend until the 1.3588 level, and the continuation of the buying trend can also lead Sterling towards the 1.3625 level. Support holds around the 1.3518 level, and a breakout can lead the pair towards the 1.3495 area. Bullish bias dominates today.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 103.074 after placing a high of 103.560 and a low of 102.872. The currency pair USD/JPY fell for the third consecutive day on Thursday amid the U.S. dollar’s broad-based weakness. The U.S. dollar fell significantly against the Japanese Yen, and the USD/JPY pair reached 102 level on Thursday as the U.S. dollar index fell below 90 levels for the first time since April 2018. The U.S. Dollar Index that measures the value of the U.S. dollar against the basket of six currencies fell to 89.7 level on Thursday and dragged the USD/JPY pair further on the downside towards its lowest since March.

On Thursday, the Wall Street main indexes rose modestly, with Dow Jones up by 0.39% and the NASDAQ by 0.42%. Meanwhile, the Japanese Yen performed well against its rivals across the board despite the risk appetite and kept the USD/JPY pair under pressure. The hopes for the second round of U.S. stimulus bill from Congress rose and weighed on the U.S. dollar as the Democrats and Republicans reached a consensus over the proposal of $900 billion stimulus aid that will include $600-$700 in the paychecks and unemployment benefits. Furthermore, the rising number of coronavirus cases in the U.S. were also weighing on the local currency as the cases in total reached about 17M in the U.S. Despite the vaccine rollout in the U.S., the rising number of coronavirus causes added pressure on the U.S. dollar and added further downside on the USD/JPY pair.

The USD/JPY pair’s downward momentum was the disappointing U.S. jobless claims on Thursday. On the data front, at 18:29 GMT, the Philly Fed Manufacturing Index in December decreased to 11.1 against the estimated 20.1 and weighed on the U.S. dollar that added pressure over the USD/JPY pair. At 18:30 GMT, the Unemployment Claims from last week increased to 885K against the estimated 817K and weighed on the U.S. dollar and dragged the pair USD/JPY further on the downside. Building Permits for November increased to 1.64M against the estimated 1.55M and supported the U.S. dollar. The Housing Starts in November remained flat as estimated at 1.55M.

Since September, the rising number of unemployment claims to the highest level suggested the effect of increasingly restrictive measures in many states due to increased coronavirus cases and people’s loss of confidence. Meanwhile, in Japan, the main upcoming event was the central bank meeting on Friday. The most likely scenario was a no change in the monetary policy setting and keeping the rates at -10bps and the 10-year JGB yield target at 0.00%. The emergency lending facilities are expected to extend beyond the current run-off date of March 31, 2021. There were no macroeconomic figures to be released from Japan on Thursday, so the pair USD/JPY kept following the U.S. dollar movements that were weak across the board on the day.


Daily Technical Levels

Support   Resistance

103.47      104.02

103.25      104.37

102.91      104.58

Pivot point: 103.81

USD/JPY – Trading Tips

The USD/JPY has reversed the selling bias to trade at the 103.550 level. The safe-haven currency pair is trading beneath an immediate support mark of 103.750, and the formation of candles beneath this level will reinforce the bearish breakout. If this happens, we may have an opportunity to short the USD/JPY pair today. Bearish bias looks firm as the MACD is creating histograms underneath 0, and the 50 periods EMA is operating around 103.800 level, suggesting strong probabilities of selling. On the lower side, the USD/JPY pair may find subsequent support at the 102.900 level. It can be a good idea to take a selling position below 103.750 today. Good luck!

Categories
Forex Elliott Wave Forex Market Analysis

Will 1.24 be the Next EURUSD Yearly High?

The EURUSD pair continues extending its gains after surpass its psychological resistance of $1.22 for the first time since late April 2018. The common currency gained over 9.20% (YTD), encouraged by the US Dollar weakness.

The EURUSD pair continues extending its gains after surpass its psychological resistance of $1.22 for the first time since late April 2018. The common currency gained over 9.20% (YTD), encouraged by the US Dollar weakness.

The EURUSD pair continues extending its gains after surpass its psychological resistance of $1.22 for the first time since late April 2018. The common currency gained over 9.20% (YTD), encouraged by the US Dollar weakness.

Technical Overview

The following daily chart illustrates the long-term market participants’ sentiment unfolded within the 52-week high and low range. The figure shows the progression starting from 1.06359, which corresponds to the lowest level of the year. 

The long-term primary trend identified with the trend-line in blue reveals that bull traders remain the market control since last March 23rd when the price found and confirmed the bottom at 1.06359 after the massive sell-off occurred last mid-February. Moreover, both the secondary trend (green trend-line) and the minor trend (black trend-line) show the bullish acceleration that carries the cross from November 04th when the EURUSD found fresh buyers expecting further upsides. 

On the other hand, although the trend looks mostly bullish, the EMA(60) to close index is moving in its overbought zone; thus, we should be prepared fr the upward movement in progress to end soon. Under this context, the main bias for bulls should change from buy to hold. Also, Bearish traders should expect confirmation signals such as a significative breakdown before placing their short positions.

Technical Overview

The mid-term Elliott wave view of the EURUSD pair exposed in the next 12-hour timeframe chart reveals the price action is reaching its second target level of $1.22575 proposed in our previous analysis. Also, the chart illustrates its progress in an incomplete wave 5 of Minor degree labeled in green.

The lesser degree structure observed in the fifth wave in green shows the progression of the wave ((iii)) of Minute degree labeled in black, which simultaneously appears advancing in its internal fifth wave of Minuette degree identified in blue. The Elliott Wave textbook suggests that, currently, the common currency moves in an extended wave. In this context, once the pair completes its rally, it should start to consolidate in its wave ((iv)) in black. This corrective formation could find support in the demand zone between 1.21061 and 1.20586, which could bring the possibility to join the long-term bullish trend. The potential target for wave 5 in green is $1.2405.

In summary, the EURUSD pair moves in its third wave of Minute degree, which should complete its rally in the coming trading sessions. The next path corresponding to wave ((iv)) in black could drag the price until the demand zone between 1.21061 and 1.20586, where the common currency could start a new rally with a potential target at 1.2405. Finally, the invalidation level of the bullish scenario is $1.19201.

Categories
Forex Signals

Gold Trades Dramatically Bullish Over Risk-off Sentiment – Quick Intraday Outlook! 

The yellow metal gold price continued to extend their previous day’s bullish bias and took some modest offers around the $1,888.93 level—the bullion prices battle Wednesday’s high despite a U-turn from $1,844 post-Fed. However, the modest downtrend in the yellow-metal prices was mainly tied to the optimism surrounding U.S. coronavirus (COVID-19) stimulus and the upbeat Brexit headlines, which kept the market trading sentiment positive and undermined the safe-haven metal prices. 

The yellow metal gold price continued to extend their previous day’s bullish bias and took some modest offers around the $1,888.93 level—the bullion prices battle Wednesday’s high despite a U-turn from $1,844 post-Fed. However, the modest downtrend in the yellow-metal prices was mainly tied to the optimism surrounding U.S. coronavirus (COVID-19) stimulus and the upbeat Brexit headlines, which kept the market trading sentiment positive and undermined the safe-haven metal prices. 

The yellow metal gold price continued to extend their previous day’s bullish bias and took some modest offers around the $1,888.93 level—the bullion prices battle Wednesday’s high despite a U-turn from $1,844 post-Fed. However, the modest downtrend in the yellow-metal prices was mainly tied to the optimism surrounding U.S. coronavirus (COVID-19) stimulus and the upbeat Brexit headlines, which kept the market trading sentiment positive and undermined the safe-haven metal prices. 

Furthermore, the upbeat trading sentiment could also be associated with the optimism over a potential vaccine/treatment for the highly infectious coronavirus, which adds further burden around the safe-haven metal. Conversely, the long-lasting coronavirus (COVID-19) woes and the tussle between US-China keep questioning the market risk-on mood, which might give some support to the bullion prices to limit its deeper losses. Elsewhere, the broad-based U.S. dollar weakness could also be considered as one of the key factors that help the bullion prices to limit its deeper losses. The yellow metal prices are currently trading at the 1,888 level and still heading upward. 

Despite the widespread doubts over the global economic recovery from coronavirus (COVID-19), the market trading sentiment remained supportive by optimism over the rollout of vaccines for the highly infectious coronavirus disease. In addition to this, the growing hopes for additional U.S. fiscal stimulus measures also exerted a positive impact on the market trading sentiment, which undermined demand for the safest assets such as the U.S. dollar.

Across the pond, the reason for the risk-on market sentiment could also be attributed to the fresh reports suggesting that the U.S. Congress inched closer to the covid stimulus. It is worth mentioning that the Republicans and Democrats in Congress were reportedly “closing in on” approving a $900 billion stimulus bill on Wednesday, the most positive sign seen in months. Moreover, they are also working to pass a $1.4 trillion spending bill for the fiscal year starting on Oct. 1. by Friday to prevent a government shutdown.

At the USD front, the broad-based U.S. dollar failed to stop its previous day bearish bias. It drew further offers on the day as Fed Chair Jerome Powell passed cautious statements, indicating disinflation pressure while expecting the economy to strengthen in the second half of 2021. Apart from this, the Federal Reserve policymakers conveyed their dovish outlook for the long-term while showing a willingness to supporting the economy until they see “further progress” in employment and inflation. Meanwhile, the risk-on market sentiment also weighed on the U.S. currency. However, the U.S. dollar losses helped the gold prices to deeper its losses as the price of gold is inversely related to the price of the U.S. dollar. The U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped by 0.04% to 90.102 by 9:12 PM ET (2:12 AM GMT).

In contrast to this, the escalating market concerns regarding the continuous rise in new coronavirus cases in the U.S. and Europe keep fueling the doubts over the global economic recovery through imposing new lockdown restrictions on economic and social activity, which keep probing the upbeat market performance and lend some support to the safe-haven yellow metal. Apart from this, the fears of a full-fledged trade/political war between the U.S. and China also challenging the market risk-on mood, which also might help the yellow-metal prices to limit their losses.


Daily Support and Resistance

S1 1827.65

S2 1840.68

S3 1848.13

Pivot Point 1861.27

R1 1868.61

R2 1889.09

R3 1909.10

On the technical side, the precious metal has entered the overbought zone as it’s hitting the resistance level of 1,893 level. Closing of candle below this level is suggesting chances of a selling correction in gold; therefore, we can expect gold to drop until 1,875 level. The MACD and RSI are suggesting strong buying trend in gold, and we should look for buying trades actually, but the metal is overbought, and it should come down a bit before giving us further buying trades. Let’s consider taking buy over 1,880 level today and selling below 1,893 level. Good luck! 

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Forex Basic Strategies

The Most Reliable 5-Minute Forex Scalping Strategy

Introduction

Introduction

Introduction

Scalping is a type of trading that involves placing many trades in a single day to profit from minor price changes in the Forex market. Traders who use this strategy are known as scalpers. It is crucial to have a robust exit strategy for scalpers to earn large gains from small market moves.

Scalping strategies are mostly applied to the intraday markets, and the trade holding duration can vary from a few seconds to minutes. For novice Forex traders, this type of trading is not recommended as scalping involves a fast-paced activity that requires precision in timing and execution.

We must always use a smaller timeframe such as a 5-min or 1-min for scalping the Forex market. We can use various reliable indicators for scalping, but in this article, we’ll learn how to scalp the 5-minute timeframe using Bollinger Bands.

Why Bollinger Bands?

Bollinger Bands is a technical analysis tool that was developed by John Bollinger. This indicator is composed of three lines as follows – A Simple Moving Average, which is the Middle band, the Upper Band & the Lower Band. The usage of Bollinger Bands indicator goes like this – the closer the price action moves to the upper band, the more overbought the market. Likewise, the closer the price moves to the lower band, the more oversold the market. The bands in this indicator widen and contract based on the market volatility. They expand when the market activity is increased and contract in choppy or less volatile markets. Let’s use this indicator in the 5-min timeframe to identify potential trading opportunities.

Scalp Trading With Bollinger Bands

We must go long when the price hits the lower band and look out for short-selling opportunities when prices hit the upper band. This is the traditional way of trading the market using Bollinger bands which is still being used by scalp traders across the world. The reason why this strategy is famous is because of its ease of usage and its ability to milk quick buck from the market.

Scalping Ranges – Example 1

In the below price chart, you can see that we have taken five buying and four selling trades in the EUR/NZD Forex pair. In this example, we have applied this strategy in a ranging market. When the price approached the support line, and when it also hit the upper Bollinger band, it is an indication for us to go long. Similarly, when the price goes near the resistance line in a range, it is an indication for us to close our long positions and look for selling opportunities.

By doing this, we have been continuously engaged in the market and made some consistent profits overall.

Example 2

Below is another example of scalp trading the Forex market when it is in the consolidation phase. Typically in a range, both the parties have equal strength. Also, it is a known fact that it is comparatively hard to trade the consolidation markets than the ranging markets. However, using this strategy, we have managed to take five buying and three selling trades in the GBPJPY Forex pair.

Scalpers typically go long or short when the price approaches the upper or lower range lines. This is the right approach, but by pairing that strategy with an indicator like Bollinger band can drastically increase the probability of those trades. The USP of the Bollinger band indicator is that it works well in all the types of market situations. It really doesn’t matter whether you scalp the ranges, channels, or even trends; this strategy will always provide reliable trading opportunities.

Example 3

In the below price chart, the price was dragging towards the upside, indicating a buying momentum, but it ended up forming a channel. In a channel, both parties hold equal power and us being scalpers; it is easy to make money from both sides. Below we can notice that if we go either long or short, we can make an equal amount of money if we are right. This is the major benefit of using Bollinger bands in channel conditions.

Scalping Trends – Example 1

Below is the price chart of the AUD/JPY currency pair in an uptrend. As you can see, during the pullback phase, the market gave us the first buy trade. When the price action approached the upper Bollinger band, the price immediately moved in the opposite direction. As a scalper, prepare your mind for these kinds of quick moves. Follow the rules of the strategy to the point, and if any trade goes three to four pips against you, immediately exit and wait for the next opportunity.

Our third buy trade also performed, but it didn’t go for bigger targets. Instead, the price action immediately reversed, which end up generating a sell signal. The next buy trade was also ended u with minor profits. For scalpers, even a profit of 8 to 10 pips can be considered good in a single trade.

Example 2

Below is an example of buying and selling trades in an uptrend in the AUD/JPY pair. We are saying this pair is an uptrend after analyzing its higher time frame. In the lower timeframe, the market may seem to be ranging, but since we know that this pair is up-trending overall, we must consider buying opportunities over sell signals.

The markets gave us five buying and three selling trades in this pair. Even though we have identifies many sell signals, we recommend not to enter those unless you have confirmation. Always remember that trend is your friend and trade according to the trend. This is the essence of scalp trading the trending markets. Therefore, when scalping trends, always go for bigger targets by following the trend. Also, expect less accuracy on counter-trend trades.

Conclusion

It requires a lot of practice to master scalping. Since the time frame is small, you must be quick in everything you do while scalping. Also, talking additional confirmations is not possible in this form of trading because of its swift nature. Please practice these strategies on a demo account before you apply them on the live markets. All the best. Cheers!

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Forex Fundamental Analysis

USD/CHF Global Macro Analysis – Part 3

USD/CHF Exogenous Analysis

USD/CHF Exogenous Analysis

USD/CHF Exogenous Analysis

The exogenous analysis covers fundamental indicators that can compare the performance of the US and Swiss economies. Note that this comparison between the two economies is what drives the exchange rate of USD/CHF. They are:

  • US and Swiss interest rate differential
  • The difference in the GDP growth in the US and Switzerland
  • Balance of trade differential

Balance of trade differential

For each country, the balance of trade shows the demand for the domestic currency in the international market. When a country has a surplus of the balance of trade, it means that its currency is in high demand in international trade. The rationale behind this is that when a country exports more than it imports, other countries will need more of that country’s currency to participate in international trade.

The balance of trade differential measures the difference between the balance of trade in Switzerland and the US. If the Swiss balance of trade is higher than that of the US, the USD/CHF pair will be bearish.

In October 2020, Switzerland had a trade surplus of CHF 2.9 billion while the US a deficit of $63.1 billion. Throughout 2020, the US trade deficit has been widening from $37 billion in January, while the Swiss trade surplus has increased from CHF 2.8 billion.

Based on the correlation with the USD/CHF pair, we assign the balance of trade differential a score of -5.

US and Switzerland interest rate differential

Typically, the country with a higher interest rate attracts more foreign capital seeking superior returns. A higher interest rate increases the domestic currency demand, which makes it appreciate in the forex market. More so, forex traders tend to be bullish on the currency with the higher interest rate.

The interest rate by The Swiss National Bank is -0.75% since January 2015. In the US, the federal funds rate is 0.25%. That makes the interest rate differential 1% for the USD/CHF pair.

Based on the correlation analysis with the USD/CHF pair, we assign the interest rate differential a score of 3.

The difference in the GDP growth in the US and Switzerland

A country’s GDP is primarily driven by domestic consumption. Although the GDP size differs in absolute terms, we can compare the US and Swiss GDP in terms of growth rate. An expanding economy is accompanied by appreciating currency. Therefore, if the US growth rate is higher than Switzerland’s, we can expect a bullish trend for the USD/CHF pair.

In Q3 of 2020, the Swiss economy expanded by 7.2% and the US by 33.1%. It means that the US economy is recovering faster than that of Switzerland. We, therefore, assign a score of 2. This implies that the GDP growth rate differential between the US and Switzerland has led to a bullish USD/CHF.

Conclusion

The USD/CHF pair has an exogenous score of -2. This implies that we can expect the pair to continue with its current bearish trend in the near future.

Note that the USD/CHF pair has breached the lower Bollinger band. Therefore, we can expect the downtrend to continue for a while, which supports our fundamental analysis. All the best.

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Forex Fundamental Analysis

USD/CHF Global Macro Analysis – Part 1 & 2

Introduction

Introduction

Introduction

When conducting the global macroeconomic analysis, endogenous and exogenous factors are considered. These analyses can be used to explain the price dynamic of a currency pair. In this case, we will analyze the endogenous factors that drive the economy in the US and Switzerland. We will also analyze the exogenous factors that primarily drives the price of the USD/CHF pair.

Ranking Scale

A sliding scale from -10 to +10 will be sued to ranks the impact of the individual endogenous and exogenous factors on the currency. A negative ranking for the endogenous factors means that they had a depreciating impact on the individual currencies, while a positive ranking means they resulted in currency appreciating.

Similarly, a negative ranking for the exogenous factors implies that they’ve had a bearish impact on the currency pair, while a positive ranking means they’ve had a bullish impact.

Summary of USD Endogenous Analysis

From the above table, we can see a clear deflationary effect on the USD currency and implies that it has depreciated in its value since the beginning of the year. You can find the complete USD Endogenous Analysis here.

Summary of CHF Endogenous Analysis

Overall, the endogenous analysis of CHF has a score of -5. That implies that the CHF is expected to have depreciated marginally in 2020.

  • Switzerland Inflation Rate

The rate of inflation is used to measure the changes in the price of consumer goods in Switzerland over a specified period – usually monthly or yearly. Here are the components of the CPI in Switzerland: Housing and energy, which accounts for 25% of the total CPI weight; 16% for healthcare; Transport accounts for 11%; Food and non-alcoholic drinks 11%; hotel and restaurant services 8%; 4% for Household goods and services; and clothing 3%. Education, communication services, and alcoholic beverages cumulatively account for 7% of the total CPI weight.

In November 2020, the YoY CPI in Switzerland dropped by 0.7%, while the MoM CPI dropped by 0.2%. The fall in prices of the hotel and holiday packages contributed to the drop in the inflation rate. The Switzerland CPI is at the lowest point since January 2018.

Based on our correlation analysis, we assign the Switzerland rate of inflation a score of -3.

  • Switzerland Unemployment Rate

This economic indicator shows the percentage of the total Swiss labor force that is actively seeking a job. Note that not all unemployed portion of the working-age population are seeking employment; so, they are not captured by the unemployment rate.

The unemployment rate can also be used to show the rate at which the economy is adding or cutting job opportunities. This can be used to show economic growth.

In October 2020, the Swiss unemployment rate was 3.2%, down from highs of 3.4% in May, while the employment rate in Q3 2020 was 79.7%. Although it is higher than the 79.1% registered in Q2, it is still significantly lower than the pre-pandemic rate of 80.4%.

The Swiss unemployment rate has a high correlation with the GDP, but since it only increased marginally, we assign it a score of -2.

  • Switzerland Manufacturing PMI

The Swiss procure.ch Manufacturing Purchasing Managers’ Index surveys the executives in the manufacturing sector. The index is a measure of the Swiss manufacturing sector’s performance and serves as a leading indicator for business expectations.

The Manufacturing PMI is an aggregate of five components: new orders, which a weight of  30%, output 25%, employment 20%, supplies 15%, and inventory 10%. The manufacturing sector is expected to expand when the index is above 50 and contract when the index is below 50.

In November 2020, the Swiss procure.ch Manufacturing PMI increased to 55.2, the highest since December 2018. Based on the correlation analysis with the GDP, we assign a score of 7 since it shows a robust expansion.

The Swiss services industry employs over 60% of the working population and accounts for 73% of Switzerland’s GDP. This makes the services PMI a crucial indicator of the overall economy. The Services PMI is obtained through a comprehensive survey of 300 purchasing managers in the services sector to evaluate the changes in business activities.

The survey covers areas such as customer new orders, purchasing, and sales prices, and changes in the employment level.

In November 2020, the Swiss services PMI dropped to 48 from 50.4 in October, primarily attributed to new orders’ contraction. Although it is almost double the 21.4 recorded in April, it is still lower than the 57.3 recorded in January 2020. We, therefore, assign it a score of -4.

  • Switzerland Consumer Confidence

In Switzerland, consumer confidence is used to evaluate households’ opinion on the overall economy and their financial position. Typically, consumer confidence is higher when there is high GDP growth, and the unemployment rate is low.

In the fourth quarter of 2020, the Swiss consumer confidence was -12.8, better than Q2 -39.3. Consumer confidence is used to show the likelihood of how much households will spend in the economy. Hence we assign it a score of -2.

  • Switzerland Government Gross Debt to GDP

The Swiss government debt is the totality of the government’s amount owed to both domestic and foreign lenders. This debt is expressed as a percentage of the GDP o help determine the indebtedness of the economy. Lenders also use this metric to determine if there is a possibility of default by the government. Typically, government debt that is less than 60% of the economy is considered ideal.

In 2019, Switzerland’s government gross debt to GDP was 41%, and it’s projected to hit 49% in 2020 due to increased government expenditure to curb the economic slowdown brought about by the coronavirus pandemic. However, the Swiss government’s gross debt to GDP has been steadily declining since 2004, averaging at around 37%. Based on our correlation analysis and the fact that it has marginally increased in 2020, we assign a score of -1.

Now we know that both USD and CHF have depreciated according to their respective endogenous indicators. Please check our next article to know if this pair is expected to be bullish or bearish in the near future according to their exogenous indicators. Cheers.

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Forex Course

192. Criteria To Carry Trade The Forex Market and Risks Involved

Introduction

Introduction

Introduction

In the previous lesson, we discussed instances when a carry can work, and when it’s bound to fail. But, having this knowledge won’t be of much help if you do not know the best criteria for a currency carry trade and the risks involved.

Criteria to Carry Trade

There are two basic criteria to carry trade the Forex market profitably.

① The interest rate differential between two currency pairs needs to be high with no prospects of reducing in the near term.

② The currency pair that we choose has to be on a bullish trend in favor of the currency with the higher interest rate. The reason for this is to ensure you can remain bullish on the high yielding currency and profit from the interest rate differential for the longest possible time.

Let’s take the example of the AUD/JPY pair. Japan’s interest rate has remained at -0.1%, while in Australia was held at 0.25%. That means the interest rate differential between the AUD/JPY pair has been 0.35%. Therefore, if you were to borrow and sell the JPY to buy the AUD, you’d expect a pay-out of 0.35%. Note that this is the same as going long on the AUD/JPY pair.

In this scenario, going long on AUD/JPY from March 2020 to October 2020 would have earned you over 900 pips. At the same time, you’d be earning an interest rate differential of 0.35%.

Risks Involved In Carry Trading

So far, a carry trade sounds like a risk-free strategy. But, like any other investment, the carry trade has its fair amount of risks – especially when leverage is involved.

Remember, in the previous lesson, we mentioned two conditions for a carry trade to thrive. First, there had to be low volatility in the market. The reason for this is to ensure that your open position is not wiped out due to currency fluctuations before you reap the profits of interest rate differential. Note that using trailing stop orders can help mitigate the risk of price fluctuations in the forex market.

The second condition for a carry trade to thrive was the stable economic conditions that might encourage the hiking of interest rates. If the economic climate is full of uncertainties, like with the ongoing coronavirus pandemic, central banks are more likely to cut interest rates than hike them. Therefore, if extreme interest rate cuts occur while you are in a currency carry trade, it could result in losses. 

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Categories
Forex Market Analysis

Daily F.X. Analysis, December 17 – Top Trade Setups In Forex – BOE Policy In Limelight! 

On the news front, the eyes will remain on the U.K. Monetary Policy reports due during the late European hours. BOE isn’t expected to change the rates, and it may keep them at 0.10%. However, it will be essential to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today. During the U.S. session, the Unemployment Claims and Philly Fed Manufacturing Index will be the main highlight to drive further market movement.

On the news front, the eyes will remain on the U.K. Monetary Policy reports due during the late European hours. BOE isn’t expected to change the rates, and it may keep them at 0.10%. However, it will be essential to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today. During the U.S. session, the Unemployment Claims and Philly Fed Manufacturing Index will be the main highlight to drive further market movement.

On the news front, the eyes will remain on the U.K. Monetary Policy reports due during the late European hours. BOE isn’t expected to change the rates, and it may keep them at 0.10%. However, it will be essential to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today. During the U.S. session, the Unemployment Claims and Philly Fed Manufacturing Index will be the main highlight to drive further market movement.

 

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.21988 after placing a high of 1.22121 and a low of 1.21450. EUR/USD pair extended its gains and rose for 3rd consecutive day on Wednesday to reach its highest since April 2018.

EUR/USD pair broke above 1.22 level mainly because of the strong PMIs on Wednesday and the U.S. dollar weakness. On the data front, at 13:15 GMT, the French Flash Services PMI for December raised to 49.2 against the expected 39.9 and supported Euro. The French Flash Manufacturing PMI in December also raised to 51.1 against the estimated 50.0 and supported Euro. 

At 13:30 GMT, the German Flash Manufacturing PMI in December surged to 58.6 against the forecasted 56.4 and supported Euro. The German Flash Services PMI also advanced to 47.7 against the expected 44.1 and supported Euro. At 14:00 GMT, the Flash manufacturing PMI from Eurozone raised to 55.5 against the forecasted 53.0 and supported Euro. The Flash Services PMI in December from the whole bloc also raised to 47.3 from the expected 41.9 and supported Euro. At 15:00 GMT, the Trade Balance from Eurozone for October came in greater than expected 22.1B as 25,9B and supported Euro.

The manufacturing and services sector in Eurozone advanced and showed growth in December that supported the single currency Euro and added in the daily gains of the EUR/USD pair. From the U.S. side, at 18:30 GMT, the Core Retail Sales for November declined to -0.9% against the projected 0.1% and weighed on the U.S. dollar and supported EUR/USD gains. For November, the Retail Sales also declined to -1.1% against the projected -0.3% and weighed on the U.S. dollar and added in the EUR/USD pair. AT 19:45 GMT, the Flash manufacturing PMI for December rose to56.5 against the projected 55.9 and supported the U.S. dollar, and capped further gains in EUR/USD pair. 

The Flash Services PMI for December declined to 55.3 against the projected 55.7 and weighed on the U.S. dollar and supported momentum upward in EUR/USD pair. At 20:00 GMT, the Business Inventories for October rose to 0.7% against the projected 0.6%and weighed on the U.S. dollar. The NAHB Housing Market Index also declined to 86 against the projected 88 and weighed on the U.S. dollar, and added additional EUR/USD pair gains.

Apart from strong PMI figures, the latest news that Moderna’s vaccine was also up to getting emergency use authorization from the US FDA by the end of this week. This vaccine will be the second vaccine after Pfizer’s drug was approved last week and is currently being used on people. This news added in the risk sentiment and supported the risk perceived EUR/USD pair.

Furthermore, the Brexit hopes also raised on Wednesday and supported the single currency Euro after E.U.’s chief negotiator explained that she could not say if there will be a trade deal with Britain, but there had been progressing. The next few days would be critical. These developments also added to the upward trend of the EUR/USD pair on Wednesday.

Moreover, the Federal Reserve concluded its two-day meeting on Wednesday and decided to keep its interest rates at the same level until the inflation reaches its target. However, it decided to extend its Q.E. program that weighed on the U.S. dollar and supported the EUR/USD pair’s upward trend.


Daily Technical Levels

Support   Resistance

1.2126      1.2175

1.2077      1.2197

1.2099      1.2224

Pivot point: 1.2148

EUR/USD– Trading Tip

The EUR/USD bullish bias continues to dominate the market as it’s trading at 1.2225. On the higher side, the EUR/USD may target the 1.2250 level and 1.2282 resistance areas. The direct currency pair may find support at 1.2175, which is extended by a double top resistance, which now is working as a support. The MACD and RSI are supporting bullish bias along with the 50 periods EMA. We can expect a continuation of a bullish trend in the EUR/USD today.

GBP/USD – Daily Analysis

 The GBP/USD pair was closed at 1.35083 after placing a high of 1.35543 and a low of 1.34340. GBP/USD pair extended its gains on Wednesday and rose to its highest level since May 2018. The British Pound pared gains on Wednesday against the U.S. dollar as reports suggested that U.K. and E.U. were close to a breakthrough on a key sticking point amid the ongoing talks. The President of European Commission Ursula von der Leyen said that there was a narrow path to an agreement on a post-Brexit trade deal with the U.K.

The U.K. acknowledged that some progress had been made but continued to suggest a no-deal was most likely outcome as significant differences remain. Reports suggested that progress has been made over the level playing rules, but differences remain over the fisheries issue, as fishing quotas remain a challenge in negotiations.

However, the U.K. has softened its tone on fisheries in a bid to get a deal over the line. Britain ditched the demands for fishing vessels operating under the U.K. flag to be majority British-owned in the post Brexit era. Whereas PM Boris Johnson remained harsh in his speech on Wednesday and said that the E.U. should realize that the U.K. has a right to take control over its land and waters like every other country.

The hopes for the Brexit trade deal increased as the recent progress on talks came as both sides were coming under increasing pressure to secure a deal before the transition period on December 31. These hopes kept the British Pound supported and GBP/USD pair higher.

On the data front, at 12:00 GMT, the Consumer Price Index from the U.K. for November fell short of expectations of 0.6% and came in as 0.3% that weighed on the British Pound. In November, the Core CPI also fell to 1.1% against the expectations of 1.4% and weighed on Sterling. The RPI of the year from the U.K. for November also declined to 0.9% against the forecasted 1.3% and weighed heavily on GBP. At 12:02 GMT, the PPI Input from the U.K. declined to 0.2% from the expected 0.4% in November and weighed on the British Pound. The PPI Output, however, remained flat with the expectations of 0.2%. At 14:30 GMT, the Flash manufacturing PMI in December from Great Britain raised to 57.3 against the projected 55.9 and supported British Pound and added GBP/USD pair gains. The Flash Services PMI, however, declined to 49.9 against the forecasted 50.5 in December and weighed on Sterling. The Housing Price Index for October advanced to 5.4% against the estimated 5.1% and supported British Pound. 

Most of the data came in against the British Pound; however, the currency pair GBP/USD remains on the upside over the latest Brexit optimism.

From the U.S. side, at 18:30 GMT, the Core Retail Sales for November fell to -0.9% against the anticipated 0.1% and weighed on the U.S. dollar and supported GBP/USD pair. The Retail Sales for November also fell to -1.1% against the anticipated -0.3% and weighed on the U.S. dollar and added gains in GBP/USD pair. 

At 19:45 GMT, the Flash manufacturing PMI for December surged to56.5 against the anticipated 55.9 and supported the U.S. dollar. The Flash Services PMI for December fell to 55.3 against the anticipated 55.7 and weighed on the U.S. dollar. At 20:00 GMT, the Business Inventories for October surged to 0.7% against the anticipated 0.6%and weighed on the U.S. dollar. The NAHB Housing Market Index also fell to 86 against the anticipated 88 and weighed on the U.S. dollar and added further gains in GBP/USD pair.

Daily Technical Levels

Support   Resistance

1.3338      1.3258

1.3213      1.3595

1.3147      1.3719

Pivot point: 1.3404

GBP/USD– Trading Tip

Since the Cable is also a direct currency pair and the dollar is getting weaker, we can expect a continuation of an upward trend in the GBP/USD pair. The GBP/USD pair may find resistance at 1.3600 and 1.3706 level, while the support level stays at 1.3470 marks. The MACD and EMA are supporting the bullish trend in the Cable. On the 4 hour timeframe, the GBP/USD pair has formed an upward channel, which may keep pushing the Sterling further higher today. The buying trend can be seen over 1.3470 level until 1.3600 and 1.3706 level.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 103.419 after placing a high of 103.915 and a low of 103.259. The USD/JPY pair extended its losses on Wednesday and reached its lowest since November 9. The USD/JPY pair dropped on Wednesday amid the U.S. dollar weakness due to rising stimulus hopes and growing vaccine optimism. The U.S. lawmakers made progress toward a coronavirus relief package that added weight on the U.S. dollar and dragged the USD/JPY pair on the downside. The U.S. Dollar Index that tracks the greenback against a basket of six other currencies was down on Wednesday to 0.1% at 90.317. 

The bipartisan group had originally proposed a $908 billion stimulus bill, but it has now been split into two bills. The first bill includes a $748 billion proposal, including aid for vaccine distribution and unemployment benefits. This bill has gained traction and is expected to pass by Congress by the end of the week. The second bill that is worth $160 billion for local and state government support along with the temporary coronavirus liability protection that appears to be having more difficulty in gathering the necessary support from Congress.

On the data front, at 04:50 GMT, the Trade Balance from Japan for November surged to 0.57T against the forecasted 0.54T and supported the Japanese Yen that added further losses in the USD/JPY pair. At 05:30 GMT, the Flash Manufacturing PMI from Japan in December also raised to 49.7 against the forecasted 48.9 and supported the Japanese Yen that added additional losses in USD/JPY pair.

Meanwhile, the Federal Reserve kept its interest rates unchanged on Wednesday and said that they would remain the same until the inflation reaches 2-3%. However, Federal Reserve also announces to purchase at least $120 Billion of U.S. treasuries and mortgage-backed securities each month until employment gets better. This way to support the U.S. economy by increasing bond purchases also weighed on the U.S. dollar and dragged the USD/JPY pair on the downside.

From the U.S. side, at 02:00 GMT, the TIC Long-Term Purchases dropped to 51.9B against the forecasted 75.5 B and weighed on the U.S. dollar, and supported the downside movement in the USD/JPY pair. At 18:30 GMT, the Core Retail Sales for November decreased to -0.9% against the estimated 0.1% and weighed on the U.S. dollar and weighed on the USD/JPY pair. The Retail Sales for November also decreased to -1.1% against the estimated -0.3% and weighed on the U.S. dollar. AT 19:45 GMT, the Flash manufacturing PMI for December advanced to56.5 against the estimated 55.9 and supported the U.S. dollar. 

The Flash Services PMI for December decreased to 55.3 against the estimated 55.7 and weighed on the U.S. dollar and dragged the USD/JPY pair on the downside. At 20:00 GMT, the Business Inventories for October advanced to 0.7% against the estimated 0.6%and weighed on the U.S. dollar. The NAHB Housing Market Index also decreased to 86 against the estimated 88 and weighed on the U.S. dollar and added further losses in the USD/JPY pair.

Another factor included in the losses of the USD/JPY pair was the increasing risk sentiment of the market from another coronavirus vaccine. Moderna has also applied for emergency use authorization of its vaccine from the U.S. regulatory FDA that is expected to approve within a week. Moderna will become the second company to get authorization from the U.S. regulator after Pfizer got approval last week and is currently being roll-out. This latest news added in the risk sentiment and weighed on the safe-haven Japanese Yen that ultimately weighed on the USD/JPY pair.

Daily Technical Levels

Support   Resistance

103.47      104.02

103.25      104.37

102.91      104.58

Pivot point: 103.81

USD/JPY – Trading Tips

The USD/JPY extends it’s selling trend as the pair trades at 103.250. The safe-haven currency pair is trading below an immediate support level of 103.250, and the closing of candles below this level will confirm the bearish breakout. If this happens, we may have an opportunity to short the USD/JPY pair today. Bearish bias seems solid as the MACD is forming histograms below 0, and the 50 periods EMA is holding around 103.860 level, suggesting strong odds of selling. On the lower side, the USD/JPY pair may find next support at the 102.900 level. Let’s consider taking a selling trade below 103.650 today. Good luck! 

Categories
Forex Signals

USD/CAD Selling Bias Dominates – Sell Signal Update! 

The USD/CAD pair was closed at 1.27392 after placing a high of 1.27892 and a low of 1.26931. The currency pair USD/CAD raised on Wednesday despite the weakness of the US dollar and rising crude oil prices amid the dovish comments from Governor of Bank of Canada Tiff Macklem.

The USD/CAD pair was closed at 1.27392 after placing a high of 1.27892 and a low of 1.26931. The currency pair USD/CAD raised on Wednesday despite the weakness of the US dollar and rising crude oil prices amid the dovish comments from Governor of Bank of Canada Tiff Macklem.

The USD/CAD pair was closed at 1.27392 after placing a high of 1.27892 and a low of 1.26931. The currency pair USD/CAD raised on Wednesday despite the weakness of the US dollar and rising crude oil prices amid the dovish comments from Governor of Bank of Canada Tiff Macklem.

On Wednesday, the US dollar was weak across the board due to the rising hopes for a further stimulus package from Congress and the dovish comments from the Federal Reserve Open Market Committee in its meeting. The bipartisan proposed that originally worth $908 billion was divided into two bills of $748 billion and $160 billion, was closer to reach a deal and get pass by Congress by the end of this week and weighed on the US dollar.

On the other hand, the WTI crude oil prices raised above $47 per barrel on Wednesday amid the declining crude oil inventories in the US over the last week. The US crude oil inventories dropped last week to -3.1M against the forecasted -2.8M and supported the crude oil prices that gave strength to the Canadian dollar that ultimately weighed on the USD/CAD pair on Wednesday.

Meanwhile, on Wednesday, the Governor of Bank of Canada Tiff Macklem warned the nation’s economy that could temporarily shrink again amid the second wave of virus cases and lightened the positive mode of the market that was lifted by the vaccine news. In his last speech of the year on Tuesday, Macklem said that uncertainty persisted and new restrictions could trigger a small contraction at the start of 2021. Sometime later next year the normal activities could resume because of the rollout of vaccines.

On the data front, at 18:30 GMT, the Consumer Price Index (CPI) for November from Canada was increased to 0.1% from the forecasted 0.0% and supported the Canadian dollar. The Common CPI declined to 1.5% against the expected 1.6% and weighed on the Canadian dollar and added gains in the USD/CAD pair. The Median CPI, however, came in line with the expectations of 1.9%. The Trimmed CPI declined to 1.7% against the estimated 1.8%and weighed on the Canadian dollar and supported an upward trend in the USD/CAD pair. 

The Foreign Securities Purchases during October in Canada were declined to 6.92B against the forecasted 10.05B and weighed heavily on the Canadian dollar and supported the gains in the USD/CAD pair. The Wholesale Sales in October surged to 1.0% against the expected 0.7% and supported the Canadian dollar. At 18:32 GMT, the Core CPI from Canada for November came in as 0.2%. The poor macroeconomic data from Canada weighed on local currency and ultimately added strength to the USD/CAD pair.

From the US side, at 18:30 GMT, the Core Retail Sales for November dropped to -0.9% against the expected 0.1% and weighed on the US dollar. The Retail Sales for November also dropped to -1.1% against the expected -0.3% and weighed on the US dollar. At 19:45 GMT, the Flash manufacturing PMI for December increased to56.5 against the expected 55.9 and supported the US dollar and added gains in the USD/CAD pair.

 The Flash Services PMI for December dropped to 55.3 against the expected 55.7 and weighed on the US dollar. At 20:00 GMT, the Business Inventories for October increased to 0.7% against the expected 0.6%and weighed on the US dollar. The NAHB Housing Market Index also dropped to 86 against the expected 88 and weighed on the US dollar and capped further upside in the USD/CAD pair.



Daily Technical Levels

Support Resistance

1.2665 1.2752

1.2632 1.2806 

1.2578 1.2839

Pivot point: 1.2719

The technical side of the USD/CAD is trading at 1.2708 level, holding below an immediate resistance level of 1.2743 mark which is extended by a downward trendline. On the lower side, the next support holds around 1.2693 level and violation of this level can extend further selling until the next support area of 1.2650 level. The MACD and RSI are in support of selling while the 50 periods EMA is dispensing a strong selling bias in the Loonie. let’s consider taking a selling trade below 1.2743 level until 1.2695 level.

Entry Price – Sell 1.27107

Stop Loss – 1.27507

Take Profit – 1.26607

Risk to Reward – 1:1.25

Profit & Loss Per Standard Lot = -$400/ +$400

Profit & Loss Per Micro Lot = -$40/ +$40

Fellas, now you can check out forex trading signals via Forex Academy mobile app. Follow the links below.

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Forex Technical Analysis

US Dollar Index awaiting FOMC Meeting in the Extreme Bearish Zone

The US Dollar Index (DXY) reached a new yearly low of 90.128, expecting the last FOMC interest rate decision meeting of the year. The analysts’ consensus anticipates the rate unchanged at 0.25% by the FED.

The US Dollar Index (DXY) reached a new yearly low of 90.128, expecting the last FOMC interest rate decision meeting of the year. The analysts’ consensus anticipates the rate unchanged at 0.25% by the FED.

The US Dollar Index (DXY) reached a new yearly low of 90.128, expecting the last FOMC interest rate decision meeting of the year. The analysts’ consensus anticipates the rate unchanged at 0.25% by the FED.

Source: TradingEconomics.com

Technical Overview

The short-term overview for the Greenback illustrated in the following 8-hour chart displays the short-term market participants’ sentiment unfolded by the 90-day high and low range, which shows the price action moving in the extreme bearish sentiment zone. Likewise, the bullish divergence observed on the EMA(60) to Close Index carries to expect a recovery for the following trading sessions.

On the other hand, the short-term primary trend outlined with its trend-line drawn in blue reveals that the bearish bias remains intact since September 25th, when the price topped at 94.742. The secondary trend plotted with the trend-line in green shows the acceleration of the downward movement that began on November 04th at 94.302.

Nevertheless, the breakdown of the last sideways range developed by DXY during the latest trading session, combined with the bullish divergence observed between the price and the EMA to Close indicator, makes us suspect a bounce, which could hit the resistance of the extreme bearish sentiment zone at 91.282.

Short-term Technical Outlook

The short-term Elliott wave view for the US Dollar Index unfolded by the next 4-hour chart exposes the bearish progression of wave ((iii)) of Minute degree labeled in black that belongs to the downward sequence that began on November 04th at 94.302. 

 

According to the textbook, the price action requires to confirm the third wave’s completion before acknowledging the start of the wave ((iv)) in black. In this regard, the internal structure of the wave ((iii)) added to the bullish divergence observed in the MACD oscillator; thus, suggesting the advance in wave (v) of Minuette degree identified in blue.

On the other hand, considering both the alternation principle and that the second wave of the same degree looks simple in terms of price and time, the next corrective structure should be complex in terms of price, time, or both.

In this context, the next DXY path could produce a bounce corresponding to the fourth wave of Minute degree, advancing to the supply zone between 91.014 and 91.200, and even strike the 91.580 level.

In summary, the US Dollar Index looks advancing in the fifth wave of Minuette degree that belongs to the third wave of Minute degree. In this context, the price action could experience a bounce corresponding to the fourth wave of Minute degree, which could move up to 91.850. Nevertheless, if the price surpasses the invalidation level located at 92.107, the Greenback could be showing the start of a reversal of the current bearish trend.

Categories
Forex Videos

Make Money In Forex With Less Risk Counter Trend Trading!

https://youtu.be/vPw5-YPKsaQ

https://youtu.be/vPw5-YPKsaQ

 


How to reduce risk while counter trading a trend

Thank you for joining this Forex Academy educational video.

In this session, we will be looking at how to reduce your risk in a counter-trend set up.

Trading against the trend is inherently risky.  However, as your experience grows as a trader, you will likely start seeing opportunities where trends run out of steam and look right for a reversal.  These kinds of trades can often be extremely profitable if the timing is right. 

Of course, trading any financial asset, but specifically foreign exchange, is almost impossible to correctly find entries and exits which are down to the pip perfect, i.e., identifying an entry or exit of a particular move within a single pip.

This is where it is important to adopt a variable approach to leverage.  Quite often, new traders will simply execute the same amount of leverage per trade, no matter what the circumstances.  So any particular trade, they might open with half a standard lot, or even a full lot, no matter whether they are trading after an economic data release, which might be low impact or a high-impact release such as non-farm payrolls, they keep their trade size the same no matter what, and this can be particularly dangerous and it is a poor aspect of money management.  A variable approach is another string to the bow of becoming a more rounded trader.

This is a 4-hour chart of GBP USD

The majority of the price action as shown during position A in this section from the 24th of November to the 3rd of December has largely been a sideways move while traders wait for the outcome of the Brexit future trade negotiations with the EU. 

Although there was a spike outside of the range at position B, price action reverted back within the original range on the 2nd of December.

There is then a bounce off of the support line and a 200 pip bull run, which breaches the resistance line, and takes price action all the way up to within a pip of the key 1.3500 level.

This is a good opportunity for profit-taking for many traders and a potential double top reversal …….

…from this daily chart of the pair with which was a multi-month as shown during August 2020.

Under these circumstances, we believe there may be a reversal in price action, and we had decided to trade against the trend, believing that it will reverse at this point.  And we initiate a short trade, with reduced leverage than perhaps we might normally use because we are trading against the trend, and then we will layer the trade with market executions or sell limit orders just above our first trade, dependant on risk, and because we cannot predict where the reversal will happen, if at all.

Had this been a real trade, at least two of the orders would have been filled, including the at market order and where there was a reversal of 89 pips, which is a healthy profit.

In this particular instance, we have taken advantage of uncertainty in the market with regard to Brexit, a multi month high, double top scenario, and a key round number 1.3500.  We have reduced our leverage because of uncertainty and the fact that it was a counter-trend reversal trade, which can be inherently risky.  But we have diluted that risk by lowering our leverage and layering the trades over varying exchange rates in close proximity to the key level of 1.3500. Stop losses should be implemented as per your personal risk appetite.    

This style can also be implemented for long trades with similar principles, and the reduced leverage and layering style can be adopted in any trade scenario. 

Categories
Forex Signals

Overbought Gold Retraces Back – Is It Worth Buying?

During Wednesday’s Asian trading session, the yellow metal prices extended their bullish overnight rally and remained well bids around above the $1,850 level. Let me remind you that the bullion prices surged more than $20 an ounce for their biggest one-day gain in a week. However, the bullish sentiment around the gold prices was being supported by the weaker U.S. dollar as the price of gold is inversely related to the price of the U.S. dollar. 

During Wednesday’s Asian trading session, the yellow metal prices extended their bullish overnight rally and remained well bids around above the $1,850 level. Let me remind you that the bullion prices surged more than $20 an ounce for their biggest one-day gain in a week. However, the bullish sentiment around the gold prices was being supported by the weaker U.S. dollar as the price of gold is inversely related to the price of the U.S. dollar. 

During Wednesday’s Asian trading session, the yellow metal prices extended their bullish overnight rally and remained well bids around above the $1,850 level. Let me remind you that the bullion prices surged more than $20 an ounce for their biggest one-day gain in a week. However, the bullish sentiment around the gold prices was being supported by the weaker U.S. dollar as the price of gold is inversely related to the price of the U.S. dollar. 

The losses in the U.S. dollar was mainly tied to the progress toward a massive U.S. government spending bill and COVID-19 relief measures, which undermined demand for the safest assets such as the U.S. dollar. In the meantime, the optimism over the potential vaccine for the highly contagious coronavirus disease is also favouring the market trading sentiment, which also weakening demand for the safe-haven assets. Across the ocean, the intensifying US-China tussle and on-going Brexit uncertainty keep challenging the market’s upbeat mood and provides an additional boost to the safe-haven metal prices. 

Apart from this, the growing market concerns about the continuous surge in new coronavirus cases and the imposition of new restrictions also favouring the yellow-metal bulls. At this time, the yellow metal prices are currently trading at 1,857.76 and consolidating in the range between 1,850.94 – 1,858.37.

Despite the intensified Sino-US tussle, Brexit uncertainty, and worries over the coronavirus (COVID-19) cases, the market trading sentiment keeps its previous-session positive performance and remained well-supportive by the combination of factors. However, the reason could be associated with the latest reports suggesting that the lawmakers stepped again to try and get Covid-19 relief through Congress after several failed attempts. 

As per the latest report, House of Representatives Speaker Nancy Pelosi, a Democrat, hosted Senate Majority Leader Mitch McConnell, a Republican, as well as Senate Democratic leader Chuck Schumer and House Republican leader Kevin McCarthy, gathered to end the long-standing deadlock on the coronavirus relief package at the 7:30 p.m. E.T. (0030 GMT). Wherein, McConnell said that lawmakers would not leave the rooms without a fiscal stimulus deal, which could be attached to the government funding bill.

Apart from this, the reason for the gains in equity markets could be attributed to the optimism over the rollout of vaccines for the highly contagious disease. This, in turn, was seen as one of the key factors that exerted selling pressure on the yellow metal prices. It should be noted that the Moderna is set for getting approval by the U.S. Food and Drug Administration (FDA). Chatters that the FDA approved first fully at-home virus test also favoured the market trading sentiment.

At the USD front, the broad-based U.S. dollar dropped to near two 1/2-year lows as progress toward the massive U.S. government spending bill, and COVID-19 relief measures undermined demand for the safest assets. The U.S. dollar will likely face further losses as the fiscal stimulus has a more substantial trickle-down effect than monetary policy, which usually lifts inflation expectations. Conversely, if the lawmakers fail again to reach an agreement, investors could turn risk-averse, which will be seen as bullish for the USD currency. Moreover, the losses in the U.S. dollar could also be associated with lingering doubts over the U.S. economic recovery from COVID-19. However, the losses in the U.S. dollar kept the gold prices higher as the price of gold is inversely related to the price of the U.S. dollar. Meanwhile, the U.S. dollar index, which measures the greenback against a bucket of currencies, was last at 90.477, after falling as low as 90.419 on Monday.

In contrast to this, the fears of rising COVID-19 cases in the U.S., Europe, and some of the notable Asian nations continually fueling the fears of renewed lockdowns in several countries. In the meantime, the U.S. new travel restriction over the Chinese Communist Party members and their families and a ban on Xinjiang cotton imports keep challenging the market risk-on mood. The tension between Sino-US further escalated after MSCI showed readiness for delisting 10 Chinese companies from its global investable markets indexes. These negative factors keep challenging the market risk-on tone and become the key factor that helps the gold prices to stay bid.


Daily Support and Resistance

S1 1807.17

S2 1827.65

S3 1840.79

Pivot Point 1848.13

R1 1861.27

R2 1868.61

R3 1889.09

Gold prices traded bullish at 1,860 level, supported over 1,848. It’s the same level that worked as resistance in the past, and now it’s working as a support for gold. On the lower side, the precious metal gold is likely to bounce off over 1,848 level as the 50 EMA is also expected to extend support here. For now, the MACD histograms are smaller but staying in buying zone. Let’s consider taking buying position over 1,848 level today with a stop below 1,845 level. Good luck! 

Categories
Forex Signals

AUD/USD Ascending Triangle Pattern – Brace for Buying! 

The AUD/USD pair was closed at 0.75571 after placing a high of 0.75712 and a low of 0.75070. The currency pair AUD/USD rose on Tuesday amid the broad-based US dollar weakness and the RBA meeting minutes from the December meeting.

The AUD/USD pair was closed at 0.75571 after placing a high of 0.75712 and a low of 0.75070. The currency pair AUD/USD rose on Tuesday amid the broad-based US dollar weakness and the RBA meeting minutes from the December meeting.

The AUD/USD pair was closed at 0.75571 after placing a high of 0.75712 and a low of 0.75070. The currency pair AUD/USD rose on Tuesday amid the broad-based US dollar weakness and the RBA meeting minutes from the December meeting.

The renewed selling pressure surrounding the greenback was helpful to AUD/USD pair for pushing it higher as the US Dollar Index (DXY) was down by 0.2% on the day towards the 90.51 level. The US dollar was weak across the board because of the renewed hopes for US stimulus measure and the rising number of coronavirus cases in the region.

Meanwhile, the rising risk sentiment of the market also helped the AUD/USD pair to gain traction in the market. The risk-sensitive Aussie gained strength after the US Food and Drug Administration reported that Moderna’s coronavirus vaccine would be approved for emergency use later this week. The rising Australian dollar helped the AUD/USD pair to post gains on Tuesday.

On the data front, from the US side, at 18:30 GMT, the Empire State Manufacturing Index for December dropped to 4.9 against the expected 6.3 and weighed on the US dollar that added gains in AUD/USD pair. The US Import Prices in November also declined to 0.1% against the expected 0.3% and weighed on the US dollar that ultimately added further gains in AUD/USD pair. At 19:15 GMT, the Capacity Utilization Rate from the US for November increased to 73.3% against the expected 73.1% and supported the US dollar. The Industrial Production in November also raised to 0.4% against the expected 0.3% and supported the US dollar. From the Australian side, the CB Leading Index for October came in as 0.8%.

Furthermore, the Reserve Bank of Australia released its minutes from the December meeting in which the Bank said that it was prepared to do more if needed, and its focus will be on the bond-buying program. RBA did not expect to raise interest rates for at least three years and until the inflation reaches the bank target of 2-3%.

Bank said that the recovery in the labour market was more advanced than expected, and substantial tightening in the labour market was needed to lift wage growth and inflation. Bank acknowledged that China’s restrictions on Australian imports had some effect, but the demand for iron-ore was still firm. Last, the Bank suggested that the delivery of vaccines in the US and Europe would reduce downside risks for global growth. These positive statements from the Reserve Bank of Australia lifted the AUD/USD pair on Tuesday.

However, the gains in AUD/USD pair on Tuesday remained limited as the latest news about the new variant of coronavirus raised fears as it spread faster and raised the safe-haven appeal, and weighed on the risk perceived Aussie that ultimately capped further upside in the AUD/USD pair.


Daily Technical Levels

Support Resistance

0.7517 0.7584

0.7479 0.7611

0.7451 0.7650

Pivot Point: 0.7545

On the technical front, the AUD/USD is trading slightly bullish at 0.7560, facing immediate resistance at 0.7580 level. Bullish crossover of this level can extend upward trend until the next target level of 0.7615. However, failure to break above 0.7580 level can extend selling moves until the support area of 0.7545 level. The 50 periods EMA is suggesting buying trend, but the MACD is suggesting overbought scenario. Thus, we should look for bearish correction before entering another buying trade in the AUD/USD pair. The bullish bias remains dominant. Good luck! 

Categories
Forex Signals

USD/CAD Bearish Bias Dominates – Descending Triangle Pattern in Play! 

The USD/CAD pair was closed at 1.26982 after placing a high of 1.27713 and a low of 1.26878. After placing gains for two consecutive days, the USD/CAD pair dropped on Tuesday amid the broad-based US dollar weakness and the rising crude oil prices.

The USD/CAD pair was closed at 1.26982 after placing a high of 1.27713 and a low of 1.26878. After placing gains for two consecutive days, the USD/CAD pair dropped on Tuesday amid the broad-based US dollar weakness and the rising crude oil prices.

The USD/CAD pair was closed at 1.26982 after placing a high of 1.27713 and a low of 1.26878. After placing gains for two consecutive days, the USD/CAD pair dropped on Tuesday amid the broad-based US dollar weakness and the rising crude oil prices.

The US dollar was weak across the board on Tuesday as the hopes for further stimulus measures from the US Congress increased. The House Speaker Nancy Pelosi called a meeting of Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, and House Majority Leader Kevin McCarthy to discuss the final government funding and coronavirus relief bill.

The optimism that Republicans and Democrats will reach a deal over the bipartisan package of coronavirus added weight on the US dollar and dragged the USD/CAD pair on the downside. Furthermore, the rising risk sentiment in the market and the increasing hopes that vaccine rollouts will help in global economic recovery raised the demand for WTI crude oil prices that gave strength to the commodity-linked Loonie and ultimately added weight on the USD/CAD pair.

On the data front, at 18:13 GMT, the Housing Starts raised to 246K against the forecasted 220K and supported the Canadian dollar that added pressure on the USD/CAD pair, and added in its losses on Tuesday. At 18:30 GMT, the Manufacturing Sales from Canada dropped to 0.3% against the forecasted 0.5% and weighed on the Canadian dollar. 

From the US front, at 18:30 GMT, the Empire State Manufacturing Index for December declined to 4.9 against the forecasted 6.3 and weighed on the US dollar that added losses in USD/CAD pair. The US Import Prices in November also fell to 0.1% against the forecasted 0.3% and weighed on the US dollar that ultimately added further losses in the USD/CAD pair. At 19:15 GMT, the Capacity Utilization Rate from the US for November rose to 73.3% against the forecasted 73.1% and supported the US dollar. The Industrial Production in November also increased to 0.4% against the forecasted 0.3% and supported the US dollar that limited the downward momentum in the USD/CAD pair on Tuesday.

Furthermore, the US dollar was also weak across the board on Tuesday because of the rising number of coronavirus cases in the region. The hospitalization rate in the US also increased as a record of 109,331 people were in the hospitals for coronavirus in the US in a single day over the weekend. The death toll has also surpassed 300,000 levels in the US, and this has feared the nation despite the vaccine rollout. These fears added weight on the local currency US dollar that ultimately added in the downward momentum of the USD/CAD pair.


Daily Technical Levels

Support Resistance

1.2665 1.2752

1.2632 1.2806

1.2578 1.2839

Pivot Point: 1.2719

The technical side of the USD/CAD is trading at 1.2728 level, holding below an immediate resistance level of 1.2743 mark which is extended by a downward trendline. On the lower side, the next support holds around 1.2693 level and violation of this level can extend further selling until the next support area of 1.2650 level. The MACD and RSI are in support of selling while the 50 periods EMA is dispensing a strong selling bias in the Loonie. let’s consider taking a selling trade below 1.2743 level until 1.2695 level. Good luck! 

Categories
Forex Course

191. Carry Trading Doesn’t Work All The Time!

Introduction 

Introduction 

Introduction 

Now that you understand what a carry trade is in the forex market, the next logical step is to show you when this strategy works and when it fails. We already know that the carry trade entirely depends on interest rates between two countries.

Let’s take the USD/JPY pair. The interest rate in Japan is -0.1%, and that in the US it is 0.25%. So, if you were to borrow and sell the JPY to buy the USD, your interest rate differential would be = 0.25 – (-0.1) = 0.35%.

In this case, you’d expect profits of 0.35%. By now, we already know that forex traders always anticipate the monetary policy actions of central banks.

When do Carry Trades Work?

There two main instances when carry trades become popular:

Firstly, it is during periods of low volatility. When there are minimal price fluctuations, traders may be induced to take on more risks to increase their profits – carry trade. In this case, provided the value of the currency doesn’t fall, the rollover earned is a good incentive.

Secondly, it’s when traders anticipate that central banks will raise interest rates. In this instance, traders will anticipate that the interest rate differential will increase, as will the pay-out.

When Do Carry Trades Not Work?

We’ve already established that for a carry trade to be effective, the interest rate differential needs to be high or increasing. That means that one country should be increasing its interest rate while another decreasing.

Similarly, the country with the lower interest rate should be decreasing while the one with the higher interest rate remains constant. Another scenario could be if the country with the lower interest rate remains constant while the one with the higher interest rate increases. If you find all this confusing, let’s explain using an example.

Economic indicators in the US points towards higher possibilities of a recession. Say the unemployment levels are increasing, manufacturing is falling, GDP is contracting, and retail sales are nose-diving.

Forex traders can anticipate that the Federal Reserve will cut interest rates to stimulate the economy. In this case, the USD will be considered a high-risk currency since investors will have a higher aversion towards it. Now, instead of purchasing the USD, investors will opt for other currencies with a more stable outlook.  The logic behind this is that the interest rate differential has reduced or is expected to reduce vis-a-vis USD/JPY.

[wp_quiz id=”99265″]
Categories
Forex Elliott Wave Forex Market Analysis

EURAUD Advances Supported by the RBA Minutes

Technical Overview

Technical Overview

Technical Overview

The EURAUD cross advanced on the overnight trading session, expecting the minutes from the last Reserve Australia Bank (RBA) interest rate decision meeting, where policymakers decided to keep unchanged the rate at 0.1% for the second month in a row.

Source: TradingEconomics.com

On the technical side, the following 12-hour chart shows the short-term market sentiment unfolded by the 90-day high and low range, which illustrates the cross consolidating in the extreme bearish sentiment zone. 

The bullish candlestick formation developed during the recent trading sessions carries to suspect the possibility of a short-term bounce. This bounce could find strike the level 1.62374 that corresponds to the resistance of the extreme bearish zone.

On the other hand, the short-term primary trend plotted in blue shows the bearish bias that remains in progress. The secondary trend also shows the intraday downward acceleration, which dragged the price until 1.60408, where the cross found support. Likewise, the bounce observed on the EMA(60) to Close Index carries to support the possibility of a limited recovery.

Technical Outlook

The short-term Elliott wave view for the EURAUD cross shows the downward progress of the incomplete five-wave sequence of Minute degree labeled in black, suggesting a limited recovery in the following trading sessions.

The next 4-hour chart shows the bearish movement subdivided into a five-wave sequence of Minute degree identified in black. It began on October 20th at 1.68273 and found its temporary bottom at 1.60408 on December 11th.

The previous figure illustrates the price looks advancing in its fifth wave in black, which after the bottom reached on the last Friday 11 session completed its wave (iii) of Minuette degree labeled in blue. In this context, according to the Elliott wave theory, the price action should start to develop a corrective formation, which could find resistance in the supply zone between 1.61786 and 1.62271.

On the other hand, considering that the wave ((iii)) in black looks like the extended wave, the fifth wave could have a limited extension. In this context, the lesser degree structure of the wave ((v)) could pierce slightly below the end of wave (iii) in blue.

In conclusion, the EURAUD cross shows the possibility of a limited recovery, which could strike the supply zone between 1.61786 and 1.62271, where the price could start to consolidate in a sideways range with support at the end of wave (iii) at 1.60408. On the other hand, if the cross surpasses the supply zone, it would indicate further recoveries, and the price could start a bullish rally. Finally, the invalidation level of the current bearish scenario locates at 1.62872.

Categories
Forex Videos

Forex For Beginners – How To Trade EURGBP! Buying The Euro With A No Brexit Trade Deal!

https://youtu.be/Um4A8P5sDyo

https://youtu.be/Um4A8P5sDyo

For beginners – How to trade the EURGBP with no trade deal Brexit 

Thank you for joining this forex academy educational video.

Great Britain voted in a national referendum to leave the European Union June 2016.  The  United Kingdom officially left the EU you in January 2020 with a one-year transition period which ends on the 31st of December 2020.

This was to allow the EU and the United Kingdom four years to come up with a future trading solution with regard to laws and arrangements which would allow the United Kingdom to take back its sovereignty, which is what the people of Great Britain wanted.

However, unravelling the years of business ties between the two areas, including laws,  fishing rights,  humanitarian issues,  worker’s rights,  competitive fairness,  financial regulatory alignment, including a whole myriad of rules and regulations has been one of the most complicated issues in modern times.  The affair is turning into an acrimonious divorcAfter the transition period, theThe two sides agreed thod they would work towards having a free trade agreem,ent which would lead to an almost seamless continuation of business.

But the United Kingdom claims that many of the terms and conditions as set out by the European Union in order to grant a free trade agreement to the United Kingdom are seen as not acceptable to the British government.  Some of these conditions are centred around fishing, where the EU wants to continue fishing in British sovereign waters, a so-called level playing field,  where the United Kingdom cannot go out and sign up other trade agreements around the world by undercutting EU member states.  And where the EU has said that any breach by the UK of such a future agreement, or where the EU changes regulations, and the UK does not fall into line, would be penalised by tariffs and which the UK has said this is totally unacceptable.  Ten deadlines have come and passed between the two sides regarding reaching an agreement,  and where currently, at the time of writing,  there are just a few days left to instigate and agreement,  and where both sides are saying this is now very unlikely to happen.

This is a daily chart of the euro to Great British pound pair ,or EURGBP,  and where we can clearly by the blue candlesticks that since the latter part of November 2020, the Euro is gaining in value on the exchange rate.  

Investors believe that the sentiment has changed in the latter stages of November and certainly since the 7th of December, and  where they believe that in the current state there will likely be no deal and therefore because the European Union is economy is much greater than that of the United Kingdom that the Euro will fare better than the pound in the event of a no tariff-free arrangement being reached.

In in the same chart we have highlighted a section A,  where the pound was gaining against the euro since August,  because the market considered that an agreement would be reached.

 

 So how can investors get in on the action and ride the pair hire based on current sentiment?

Firstly, we need to bring the chart down to a smaller time frame, such as the one hour.  Here we can see a defined bull channel, with areas of support at two points and areas of resistance at two points as show by the exchange rate touching the two purple lines, and where we might consider going long at a pull-back to the support line, perhaps somewhere around the X mark.  

By reverting back to our daily chart we can see some potential targets, or areas of resistance, the closest is 0.9294  which was reached in September 2020 and way back in  the middle of March this year, where we have a target/resistance level of 0.9500.

Of course the exchange rate might be a little different by the time you get to view this video, however, should there be a no tariff deal agreement and where the United Kingdom crashes out of the EU on world trade organisation rules, where tariffs will be imposed by either side,  but most likely to be more detrimental to the UK than the EU, you should then be looking for setups such as we have shown today to buy the pair.

Categories
Forex Signals

AUD/USD Supported Over 0.7515 Level – Is It Good Time to Buy? 

The AUD/USD pair was closed at 0.75324 after placing a high of 0.75779 and a low of 0.75243. After placing gains for three consecutive days, the AUD/USD pair dropped on Monday despite the market’s risk flows. After rising above the highest level since June 2018, the AUD/USD pair saw heavy technical selling in the market. The pair reached above the 0.75700 level and faced heavy selling pressure as the investors started to take profits from their trades. The profit-taking overshadowed the market’s risk flows, and the pair AUD/USD continued falling on Monday. 

The AUD/USD pair was closed at 0.75324 after placing a high of 0.75779 and a low of 0.75243. After placing gains for three consecutive days, the AUD/USD pair dropped on Monday despite the market’s risk flows. After rising above the highest level since June 2018, the AUD/USD pair saw heavy technical selling in the market. The pair reached above the 0.75700 level and faced heavy selling pressure as the investors started to take profits from their trades. The profit-taking overshadowed the market’s risk flows, and the pair AUD/USD continued falling on Monday. 

The AUD/USD pair was closed at 0.75324 after placing a high of 0.75779 and a low of 0.75243. After placing gains for three consecutive days, the AUD/USD pair dropped on Monday despite the market’s risk flows. After rising above the highest level since June 2018, the AUD/USD pair saw heavy technical selling in the market. The pair reached above the 0.75700 level and faced heavy selling pressure as the investors started to take profits from their trades. The profit-taking overshadowed the market’s risk flows, and the pair AUD/USD continued falling on Monday. 

The risk sentiment was improved on Monday due to the latest vaccine rollout in the US and Canada after the UK. The US started giving Pfizer and BioNtech vaccine doses to nurses and health officials on Monday as it provides a 95% efficacy rate against the coronavirus.

The vaccine rolls out raised hopes that the global economic recovery will soon begin as the coronavirus will become less of a threat. This optimism raised the risk sentiment in the market but failed to impress the risk-sensitive Aussie buyers.

The risk sentiment was also supported by the latest hopes that the US coronavirus stimulus bill will be released soon to support the US economy from the coronavirus impact. The US dollar also came under pressure as the coronavirus cases, and the death toll from COVID-19 surpassed 300,000 number. The US dollar weakness could not impress the AUD/USD buyers, and the pair continued its bearish movement on Monday.

Meanwhile, the AUD/USD pair was under pressure on Monday as Biden has said that he will not remove the tariffs on Chinese products by Trump immediately. The President-elect nominated Katherine Tail for the role of US trade representative said on Friday that she was the trade enforcer against China’s unfair trade practices that will be a key priority in the Biden-Harris administration. It was a sign that Donald trump’s trade war will continue, which weighed on the China-Proxy Australian dollar and added losses in the AUD/USD pair on Monday.


Daily Technical Levels

Support Resistance

0.7514 0.7570

0.7492 0.7602

0.7459 0.7625

Pivot point: 0.7547

The AUD/USD is trading sideways at 0.7515, but it’s supported by an upward trendline that can be seen in the 2-hour timeframe. On the higher side, the AUD/USD is forming a double top level at 0.7527, which is now extending resistance. The leading technical indicators such as MACD and RSI support the buying trend, while the 50 periods EMA is also supporting the AUD/USD pair at 0.7515. Let’s consider buying over 0.7515 level to capture quick 40 pips. Good luck! 

Categories
Forex Signals

GBP/USD Violates Double Bottom – Sell Trade in Play! 

The GBP/USD is trading at the 1.3330 level, maintaining a narrow trading range of 1.3345 – 1.3309. A lack of high-impact economic data drives the choppy session; however, the market will be offering us labor market figures, which are expected to be worse than before, and it may drive selling in the Sterling. Technically, the bearish breakout of the 1.3309 level can extend the selling trend until the 1.3265 level, whereas a bullish breakout can lead it towards the 1.3409 mark. A choppy session can be expected until the pair violates the 1.3345 – 1.3309 range.

The GBP/USD is trading at the 1.3330 level, maintaining a narrow trading range of 1.3345 – 1.3309. A lack of high-impact economic data drives the choppy session; however, the market will be offering us labor market figures, which are expected to be worse than before, and it may drive selling in the Sterling. Technically, the bearish breakout of the 1.3309 level can extend the selling trend until the 1.3265 level, whereas a bullish breakout can lead it towards the 1.3409 mark. A choppy session can be expected until the pair violates the 1.3345 – 1.3309 range.

The GBP/USD is trading at the 1.3330 level, maintaining a narrow trading range of 1.3345 – 1.3309. A lack of high-impact economic data drives the choppy session; however, the market will be offering us labor market figures, which are expected to be worse than before, and it may drive selling in the Sterling. Technically, the bearish breakout of the 1.3309 level can extend the selling trend until the 1.3265 level, whereas a bullish breakout can lead it towards the 1.3409 mark. A choppy session can be expected until the pair violates the 1.3345 – 1.3309 range.


Entry Price – Sell 1.33045

Stop Loss – 1.33445

Take Profit – 1.32645

Risk to Reward – 1:1

Profit & Loss Per Standard Lot = -$400/ +$400

Profit & Loss Per Micro Lot = -$40/ +$40

Fellas, now you can check out forex trading signals via Forex Academy mobile app. Follow the links below.

iPhone Users: https://apps.apple.com/es/app/fasignals/id1521281368

Andriod Users: https://play.google.com/store/apps/details?id=academy.forex.thesignal&hl=en_US

Categories
Forex Market Analysis

Daily F.X. Analysis, December 15 – Top Trade Setups In Forex – U.K. Labor Market Figures! 

Investor’s eyes will stay on the French Final CPI and Italian Trade Balance due from the European Economy. Economists are expecting no major changes in these inflation and trade balance data. Thus it may go muted. However, the Claimant Count Change and Unemployment Rate data from the U.K. is likely to drive market movements. Let’s keep an eye on U.K. labor market figures today.

Investor’s eyes will stay on the French Final CPI and Italian Trade Balance due from the European Economy. Economists are expecting no major changes in these inflation and trade balance data. Thus it may go muted. However, the Claimant Count Change and Unemployment Rate data from the U.K. is likely to drive market movements. Let’s keep an eye on U.K. labor market figures today.

Investor’s eyes will stay on the French Final CPI and Italian Trade Balance due from the European Economy. Economists are expecting no major changes in these inflation and trade balance data. Thus it may go muted. However, the Claimant Count Change and Unemployment Rate data from the U.K. is likely to drive market movements. Let’s keep an eye on U.K. labor market figures today.

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

During Tuesday’s Asian trading session, the EUR/USD currency pair managed to extend its overnight winning streak and sidelined near above the 1.2150 level mainly due to the risk-on market sentiment. That was supported by the upbeat China data and optimism over treatment for the highly infectious coronavirus, which weakens the safe-haven U.S. dollar and contributes to the currency pair gains. Moreover, the upbeat market tone was further boosted by the further U.S. stimulus package’s rising expectations, which add further burden around the U.S. dollar and boost the currency pair. 

On the contrary, the ongoing concerns about increasing COVID-19 deaths and the possibility of economically-painful hard lockdowns become the key factor that kept the lid on any additional gains in the currency pair. As of writing, the EUR/USD currency pair is currently trading at 1.2149 and consolidating in the range between 1.2143 – 1.2165.

As we already mentioned, the market trading sentiment succeeded in extending its previous day bullish bias and still representing positive performance on the day as the bullish appearance of Asia-Pacific stocks and the gains of the U.S. stocks futures tends to highlight the risk-on mood. However, the risk-on market sentiment could be attributed to the vaccine optimism and upbeat China data, which showed the economic recovery increased in November. On the data front, China’s Retail Sales increased by 5.0% year-on-year in November, marking the 4th-successive month of growth. Industrial Production, a gauge of manufacturing, mining, and utility output, rose 7% year-on-year versus October’s 5.9% growth. 

On the other hand, the renewed optimism over a possible vaccine for the highly infectious coronavirus disease also keeps supporting the market trading sentiment. It is worth recalling that the U.S. Food and Drug Administration (FDA) granted permission for emergency use to BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy) on December 11. The approval will see the first U.S. deliveries of BNT162b2 later in the day, which lifted hopes that the world’s largest economy will likely see a reduction in the COVID-19 cases. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and undermine the safe-haven U.S. dollar.

As in result, the broad-based U.S. dollar failed to stop its previous day bearish bias and drew further offers on the day as demand for the safe-haven assets decreased amid progress toward agreeing on U.S. fiscal stimulus and optimism for a Brexit deal. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the U.S. dollar losses helped the gold prices to deeper its losses as the gold price is inversely related to the U.S. dollar price. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped to 90.642.

On the contrary, the concerns about rising COVID-19 deaths and the possibility of economically-painful hard lockdowns keep challenging the upbeat market performance, which becomes the key factor that kept the lid on any additional gains currency pair. As per the latest report, the growing virus cases recall the local lockdowns in the U.K. and the U.S. After New York, that was witnessed readiness to enter a second full lockdown as the number of COVID-19 cases surge. In addition to this, Germany also extended national activity restrictions. Across the ocean, the fears of a full-fledged trade/political war between the West and China also challenge the market’s upbeat mood. The tension between the two biggest economies in the world was fueled after the U.S. imposed back to back travel restrictions over the Chinese Communist Party members and their families.

In the absence of the major data/events on the day, the market traders will keep their eyes on the continuous drama surrounding the U.S. stimulus package. In the meantime, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for a fresh direction. 

Daily Technical Levels

Support   Resistance

1.2044       1.2133

1.2006       1.2186

1.1954       1.2223

Pivot point: 1.2096

EUR/USD– Trading Tip

The technical side of the EUR/USD is still unchanged as it trades at the 1.2131 level, facing immediate resistance at 1.2160 and 1.2196 level along with a support level of 1.2085. Closing of candles below the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. The 50 periods EMA supports a bullish bias, keeping the EUR/USD pair in a little bit of buying mode. Simultaneously, the MACD and RSI are also in support of a buying trend; thus, we should look for a buying trade over the 1.2175 level to target the 1.2265 level today. 

GBP/USD – Daily Analysis

During Tuesday’s Asian trading session, the GBP/USD currency pair maintained its strong bid tone through the first half of the Asian session and remained positive around the 1.3335 level mainly due to the reports suggesting that the U.K. and the E.U. agreed to extend Brexit talks. Furthermore, the bid tone surrounding the British pound was further bolstered after the E.U.’s chief Brexit negotiator, Michel Barnier, said that they could face every hurdle to reach a post-Brexit trade deal. 

Across the ocean, the broad-based U.S. dollar fresh weakness, backed by the market risk-on mood, also played its major role in underpinning the currency pair. At a particular time, the GBP/USD currency pair is currently trading at 1.3333 and consolidating in the range between 1.3312 – 1.3348. Moving on, the traders seem cautious to place any strong position ahead of the U.K. jobs data, which is due to release later in the day.

It is worth recalling that the U.K. Prime Minister Boris Johnson and European Commission President announced that they discussed the key issues and decided to go for another round of discussions to reach a historic trade deal, which in turn, raised expectations for a free trade agreement before the end of Brexit transition period on December 31. However, these hopes were further fueled after the E.U.’s chief Brexit negotiator, Michel Barnier, told them to use every way to reach a post-Brexit trade deal.

Despite the prevalent doubts over the global economic recovery from coronavirus (COVID-19), the market trading sentiment managed to extend its previous day’s positive performance. It remained supportive by optimism over a potential vaccine/treatment for the highly infectious coronavirus. Let me remind you that the U.S. Food and Drug Administration (FDA) granted permission for emergency use to BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy) on December 11. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and undermine the safe-haven U.S. dollar.

As in result, the broad-based U.S. dollar failed to stop its previous day bearish bias and drew further offers on the day as demand for the safe-haven assets decreased amid progress toward agreeing on U.S. fiscal stimulus and optimism for a Brexit deal. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the U.S. dollar losses provided an additional boost to the GBP/USD currency pair and remained supportive of the strong intraday positive move. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped to 90.642.

On the bearish side, the concerns about rising COVID-19 deaths and the possibilities of the economically-painful hard lockdowns keep challenging the upbeat market performance, which becomes the key factor that kept the lid on any additional gains in the currency pair. As per the latest report, the growing virus cases recall the local lockdowns in the U.K. and the U.S. After New York, that was witnessed readiness to enter a second full lockdown as the number of COVID-19 cases surge. In addition to this, Germany also extended national activity restrictions. 

Moving on, the traders seem cautious to place any strong position ahead of the U.K. jobs data, which is due to release later in the day. From the projected view, the U.K. labor market report is anticipated to show that the average weekly earnings, including bonuses, in the 3-months to October, to increase from the previous 1.3% to 2.2%, while ex-bonuses, the wages are seen improving from 1.9% to 2.6% during the stated period. 

In addition to this, the number of people asking for jobless benefits is expected to rise from -29.8K previous to +50K in November. Moreover, the ILO Unemployment Rate may rise from 4.8% to 5.1% during the 3- months ending in October. However, the positive earnings growth tends to underpin the GBP; conversely, the low figures would be seen as negative for the GBP currency.

In the absence of the major data/events on the day, the market traders will keep their eyes on the continuous drama surrounding the U.S. stimulus package. In the meantime, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for a fresh direction. 

Daily Technical Levels

Support   Resistance

1.3338       1.3466

1.3280       1.3536

1.3209       1.3594

Pivot point: 1.3408

GBP/USD– Trading Tip

The GBP/USD is trading at the 1.3330 level, maintaining a narrow trading range of 1.3345 – 1.3309. A lack of high-impact economic data drives the choppy session; however, the market will be offering us labor market figures, which are expected to be worse than before, and it may drive selling in the Sterling. Technically, the bearish breakout of the 1.3309 level can extend the selling trend until the 1.3265 level, whereas a bullish breakout can lead it towards the 1.3409 mark. A choppy session can be expected until the pair violates the 1.3345 – 1.3309 range.

USD/JPY – Daily Analysis

During Tuesday’s Asian trading session, the USD/JPY currency pair managed to stop its previous day losing streak and drew some modest bids around well above the 104.00 level. However, the bullish sentiment around the currency pair was supported by the upbeat market mood, which undermined the safe-haven Japanese yen and contributed to the currency pair gains. Apart from this, the latest local lockdowns in the northern hemispheres and the surge in Tokyo’s virus figures added further pressure on the Japanese yen and boosted the currency pair. On the contrary, the broad-based U.S. dollar, triggered by the upbeat market mood, has become the key factor that capped further upside momentum for the currency pair. Currently, the USD/JPY currency pair is currently trading at 104.09 and consolidating in the range between 103.98 – 104.15. 

As we already mentioned, market trading sentiment has been gaining positive traction since the day started and supported by the optimism over the U.S. President-elect Joe Biden’s victory in the Electoral College. As per the latest report, the U.S. President-elect Joe Biden recently won Electoral College and claimed his victory over President Donald Trump by achieving over 270 votes needed. In addition to this, the intensifying hopes of the U.S. covid stimulus also positively impacted the market trading sentiment. These hopes were triggered after Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi urged policymakers toward an early aid package while also indicating good progress in the discussions. 

Across the ocean, the reason behind the risk-on market sentiment could also be attributed to the upbeat China data, which showed the economic recovery improved in November. On the data front, China’s Retail Sales increased by 5.0% year-on-year in November, marking the 4th-successive month of growth. Industrial Production, a gauge of manufacturing, mining, and utility output, rose 7% year-on-year versus October’s 5.9% growth. 

On the other hand, the renewed optimism over a possible vaccine for the highly infectious coronavirus disease also keeps supporting the market trading sentiment. It is worth recalling that the U.S. Food and Drug Administration (FDA) granted permission for emergency use to BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy) on December 11. The approval will see the first U.S. deliveries of BNT162b2 later in the day, which lifted hopes that the world’s largest economy will likely see a reduction in the COVID-19 cases. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and undermined the safe-haven assets like the Japanese yen and U.S. dollar.

At the USD front, the broad-based U.S. dollar extended its previous session bearish bias. It failed to gain any positive traction during the Asian trading hours amid risk-on market sentiment. Apart from this, the greenback losses could also be associated with the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the U.S. dollar losses might stop bulls from placing any strong position and keep a lid on any further gains for the USD/JPY currency pair. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped to 90.642.

However, the market trading sentiment was rather unaffected by the fresh lockdown restrictions in Britain and Europe. As per the latest report, the growing virus numbers recall the local lockdowns in the U.K. and the U.S. After New York, a willingness to enter a second full lockdown as the number of COVID-19 cases surge. In addition to this, Germany also extended national activity restrictions. 

In the absence of the major data/events on the day, the market traders will keep their eyes on the ongoing drama surrounding the U.S. stimulus package. In the meantime, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for a fresh direction. 

Daily Technical Levels

Support   Resistance

104.04       104.41

103.86       104.60

103.67       104.78

Pivot Point: 104.23

USD/JPY – Trading Tips

The USD/JPY is hardly moving as it continues to trade sideways below the 104.150 resistance area. This resistance area is extended by a double top level on the 2-hour timeframe. Bullish crossover of 104.156 level can open buying until 104.590 level. Conversely, the support holds around 103.910 level. A bearish breakout of this support can drive the selling trend until the next support area of 103.700 and 103.500. Let’s keep an eye on a breakout before placing any bullish or bearish bets. Good luck! 

Categories
Forex Fundamental Analysis

AUD/USD Global Macro Analysis – Part 3

AUD/USD Exogenous Analysis

AUD/USD Exogenous Analysis

AUD/USD Exogenous Analysis

In the exogenous analysis, we will compare the differentials in the US and the Australian economies at an international level. We will use:

  • The differential in GDP growth in the US and Australia
  • The US and Australian interest rate differential
  • The differential in the US and Australian balance of trade

The differential in GDP growth in the US and Australia

Domestically, the value of USD and AUD are pushed by the changes in the macroeconomic factors that drive GDP growth. The dynamic of the AUD/USD exchange rate is affected by the difference in the GDP growth rate. The country with a faster GDP growth will see its currency appreciate more than the one with slower growth.

In Q3 of 2020, the Australian GDP increased by 3.3% compared to the 7% drop in Q2. The US economy expanded by 33.1% in Q3 2020 compared to a 31.4% drop in Q2. In the first three quarters, the US economy has contracted by 3.3% while the Australian economy has contracted by 4%. Therefore, the GDP growth differential between Australia and the US is -0.7%. Based on the correlation analysis with the AUD/USD pair, we assign a score of -2.

The US and Australian interest rate differential

This measures the difference between the interest rate set by the Reserve Bank of Australia (RBA) and the US Federal Reserve. In the forex market, carry traders tend to be bullish when a currency pair has a positive interest rate differential and bearish when it is negative. That is because more investor funds flow towards the country with a higher interest rate.

At the onset of the COVID-19 pandemic, the RBA cut interest rates from 0.75% to 0.1%, while the Federal Reserve cut interest rates from 1.75% to 0.25%. That makes the interest rate differential for the AUD/USD pair -0.15%. Based on correlation analysis with the exchange rate for the AUD/USD pair, we assign a score of -2.

The differential in the US and Australian balance of trade

The difference between the balance of trade for Australia and the US will help determine which currency is in higher demand in international trade. Note that increased demand in the forex market also increases the value of that currency.

In October 2020, Australia’s trade surplus increased to AUD 7.46 billion compared to 5.82 billion in September. However, it is still lower than the highest recorded AUD 9.62 billion surpluses in March. The US had a trade deficit of $63.1 billion in October, which has been expanding since January. The balance of trade differential is $68.633 billion between Australia and the US. Based on the correlation with the AUD/USD exchange rate, we assign a score of 6.

Conclusion

The exogenous score for the AUD/USD pair is 2. It means that we can expect that the pair will be on a bullish trend in the short-term.

In technical analysis, the short-term bullish trend is supported by the fact that the pair is trading above the 200-period MA and breaching the upper Bollinger Band. Cheers!

Categories
Forex Signals

USD/CAD Violates Descending Triangle Pattern – Signal Update! 

During Monday’s Asian trading session, the USD/CAD currency pair failed to stop its overnight losses and remain depressed around below the 1.2750 level due to the broad-based U.S. dollar weakness. The prevalent downtrend in the greenback was mainly tied to the fresh optimism over a potential vaccine for the highly contagious coronavirus disease, which kept the market trading sentiment positive and undermined the safe-haven USD dollar. Furthermore, the U.S. dollar losses were further bolstered by the renewed probabilities that the Fed will keep interest rates low for an extended period at its last policy meeting of 2020. 

During Monday’s Asian trading session, the USD/CAD currency pair failed to stop its overnight losses and remain depressed around below the 1.2750 level due to the broad-based U.S. dollar weakness. The prevalent downtrend in the greenback was mainly tied to the fresh optimism over a potential vaccine for the highly contagious coronavirus disease, which kept the market trading sentiment positive and undermined the safe-haven USD dollar. Furthermore, the U.S. dollar losses were further bolstered by the renewed probabilities that the Fed will keep interest rates low for an extended period at its last policy meeting of 2020. 

During Monday’s Asian trading session, the USD/CAD currency pair failed to stop its overnight losses and remain depressed around below the 1.2750 level due to the broad-based U.S. dollar weakness. The prevalent downtrend in the greenback was mainly tied to the fresh optimism over a potential vaccine for the highly contagious coronavirus disease, which kept the market trading sentiment positive and undermined the safe-haven USD dollar. Furthermore, the U.S. dollar losses were further bolstered by the renewed probabilities that the Fed will keep interest rates low for an extended period at its last policy meeting of 2020. 

Across the pond, the reason for the declines in the currency pair could also be attributed to the fresh upticks in the crude oil prices, which tend to underpin the commodity-linked currency the Loonie and contributes to the currency pair’s losses. However, the crude oil prices were supported by prevalent optimism over a potential vaccine for the highly infectious coronavirus disease, which ultimately fueled hopes for a recovery in fuel demand and contributed to the crude oil price gains. As of writing, the USD/CAD currency pair is currently trading at 1.2755 and consolidating in the range between 1.2745 – 1.2764.

As we already mentioned, the market trading sentiment represented positive performance on the day as the bullish appearance of Asia-Pacific stocks and upticks of the U.S. 10-year Treasury yields tend to highlight the risk-on mood being supportive by optimism over a potential vaccine/treatment for the highly infectious coronavirus. It is worth recalling that the U.S. Food and Drug Administration (FDA) provided emergency use permission to BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy) on Dec. 11. The approval will see the first U.S. deliveries of BNT162b2 later in the day, which lifted hopes that the world’s largest economy will likely see a reduction in the COVID-19 cases.

At the USD front, the broad-based U.S. dollar failed to erase its overnight losses and remained under pressure on the day mainly due to the market risk-on tone. Apart from this, coronavirus’s resurgence keeps fueling the fears that the U.S. economic recovery could be halt, which also keeps the greenback under pressure. On the other hand, the U.S. dollar losses were further bolstered by the expectations that the Fed will keep interest rates low for an extended period at its last policy meeting of 2020. However, the U.S. dollar losses could be considered the major factor that kept the currency pair lower. Meantime, the U.S. Dollar Index, which tracks the greenback against a bucket of other currencies, dropped by 0.03% to 92.487 by 10:02 PM ET (2:02 AM GMT).

At the crude oil front, WTI crude oil prices remained well bid around closer to $47.00 on the day, backed by the prevalent optimism over a potential vaccine for the highly infectious coronavirus disease, which ultimately fueled hopes for a recovery in fuel demand and contributed to the crude oil price gains. Apart from this, the reason for the crude oil gains could also be associated with fresh, positive reports suggesting an extension of Brexit talks between the U.K. and the European Union (E.U.), which eased global fuel demand worries and contributed to the crude oil price gains. Thus, the crude oil prices’ upticks underpinned the commodity-linked currency the Loonie and exerted some downside pressure on the currency pair. 

In the absence of significant data/events on the day, the market traders will keep their eyes on the continuous drama surrounding the U.S. stimulus package. In the meantime, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for a fresh direction. 


Daily Support and Resistance

S1 1.2613

S2 1.2687

S3 1.2727

Pivot Point 1.276

R1 1.28

R2 1.2833

R3 1.2907

Entry Price – Sell 1.274

Stop Loss – 1.2733

Take Profit – 1.27

Risk to Reward – 1:1

Profit & Loss Per Standard Lot = -$400/ +$400

Profit & Loss Per Micro Lot = -$40/ +$40

Fellas, now you can check out forex trading signals via Forex Academy mobile app. Follow the links below.

iPhone Users: https://apps.apple.com/es/app/fasignals/id1521281368

Andriod Users: https://play.google.com/store/apps/details?id=academy.forex.thesignal&hl=en_US

Categories
Forex Elliott Wave Forex Market Analysis

NZDUSD Could Reach a New Yearly High

The NZDUSD pair continues extending its gains, testing the psychological barrier of 0.71, helped by the US Dollar weakness. The Oceanic currency outperforms over 5.4% during the current year. Also, the pair advances over 27% since it confirmed its bottom on March 22nd at 0.55862.

The NZDUSD pair continues extending its gains, testing the psychological barrier of 0.71, helped by the US Dollar weakness. The Oceanic currency outperforms over 5.4% during the current year. Also, the pair advances over 27% since it confirmed its bottom on March 22nd at 0.55862.

The NZDUSD pair continues extending its gains, testing the psychological barrier of 0.71, helped by the US Dollar weakness. The Oceanic currency outperforms over 5.4% during the current year. Also, the pair advances over 27% since it confirmed its bottom on March 22nd at 0.55862.

Technical Overview

The big picture of the NZDUSD illustrated in the following 12-hour chart shows the primary upward trend, its trendline plotted in blue, intact since March 22nd when the price confirmed its bottom at 0.55862 and began the rally that remains in progress to date. Likewise, the secondary trend and its green trendline reveal the acceleration of the price testing by the third time the psychological barrier of 0.71.

Considering that the NZDUSD pair currently re-tests the 0.71 level, the price could extend its gains, reaching a new yearly high, to find resistance in the next psychological resistance of 0.72.

Short-term Technical Outlook

The short-term Elliott wave view for the NZDUSD pair unfolded by its 4-hour chart led us to observe an incomplete impulsive sequence of Minute degree labeled in black, which began on October 22nd price found fresh buyers at 0.65529.

The previous chart illustrates the impulsive structure that continues progressing and looks to develop its fourth wave of Minute degree labeled in black. Moreover, in the chart, we should remark that the third wave, which looks like the extended wave of the incomplete impulsive sequence identified in black, has found resistance at 0.71043 on December 03rd. 

Once the price topped the yearly high at 0.71043, the pair began to develop a sideways corrective formation, still progressing. In this regard, considering both the alternation principle stated by the Elliott Wave Theory and that wave ((ii)) in black looks like a simple corrective pattern, the current wave ((iv)) of the same degree should be complex in terms of price, time, or both.

In this scenario, the price action might retrace until the demand zone bounded between 0.69462 and 0.68970, where the Kiwi could find fresh buyers expecting to boost the pair toward a new yearly high. This high could strike the potential target zone between 0.71618 and 0.7260.

In summary, the short-term Elliott wave perspective for the NZDUSD pair reveals the advance in a bullish trend that currently moves mostly sideways in an incomplete corrective formation. The fourth wave in progress could find support in the demand zone bounded between 0.69462 and 0.68970. Likewise, fresh buyers could boost the price toward 0.71618 and extend its gains until 0.7260. Finally, the invalidation level of the current bullish scenario is located at 0.68106.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 14 – Top Trade Setups In Forex – European Events in Highlights!  

On the news side, the market is expected to report a low impact on economic events, which may have a very slight or no effect on the market. The German WPI m/m, Industrial Production, and German Buba Monthly Report will be released from the European economy. Still, I suspect there’s not going to be any significant movement in the market.

On the news side, the market is expected to report a low impact on economic events, which may have a very slight or no effect on the market. The German WPI m/m, Industrial Production, and German Buba Monthly Report will be released from the European economy. Still, I suspect there’s not going to be any significant movement in the market.

On the news side, the market is expected to report a low impact on economic events, which may have a very slight or no effect on the market. The German WPI m/m, Industrial Production, and German Buba Monthly Report will be released from the European economy. Still, I suspect there’s not going to be any significant movement in the market.

Economic Events to Watch Today  

  

EUR/USD – Daily Analysis

During Monday’s Asian trading session, the EUR/USD currency pair succeeded in extending its overnight winning streak and remained well bid around the 1.2140 level mainly due to the risk-on market sentiment. That was supported by the optimism over treatment for the highly infectious coronavirus, which tends to weaken the safe-haven U.S. dollar and contributes to the currency pair gains. 

Moreover, the upbeat market tone was further boosted by the increasing expectations of a further U.S. stimulus package, which boosted the currency pair. On the contrary, the fresh jump in infections and death toll in Europe keeps fueling the doubts over the Eurozone economic recovery, which becomes the key factor that kept the lid on any additional currency pair gains. The EUR/USD is trading at 1.2134 and consolidating between 1.2116 and 1.2145.

The global equity market has been flashing green since the day started and is supported by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members are still progressing over the much-awaited stimulus talks. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. Across the pond, the optimism over treatment for the highly infectious coronavirus has also been favoring the market trading sentiment. These hopes were sparked after the U.S. Food and Drug Administration’s (FDA) officially authorized the Pfizer-BioNTech covid vaccine for emergency use. Thereby, the upbeat market mood has been playing its major role in underpinning the currency pair.

The broad-based U.S. dollar declined to obtain any positive traction and drew an offer on the day as doubts persist over the global economic recovery from COVID-19. That was witnessed by the U.S. previous week’s downbeat U.S. data. Meanwhile, the risk-on market sentiment also weighed on the U.S. currency. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair higher. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

On the contrary, the intensifying coronavirus woes across the globe and intensifying lockdowns restrictions in Europe and the U.S. keep challenging the upbeat market performance and become the key factor that kept the lid on any additional gains in the currency pair. As per the latest report, the growing virus cases recall the local lockdowns in the U.K. and the U.S. In the meantime, Germany also extended national activity restrictions. Meanwhile, the fears of a full-fledged trade/political war between the West and China also challenge the market’s upbeat mood. The tension between the two largest markets in the world was fueled after the U.S. imposed back to back travel restrictions over the Chinese Communist Party members and their families.

Looking forward, the traders will keep their eyes on the U.S. employment data for November along with Euro German Factory Orders data, which will likely entertain market players amid a light calendar. All in all, the updates surrounding the Brexit, virus, and U.S. stimulus package will not lose their importance. 

Daily Technical Levels

Support   Resistance

1.2044       1.2133

1.2006       1.2186

1.1954       1.2223

Pivot point: 1.2096

EUR/USD– Trading Tip

The technical side of the EUR/USD is trading choppy at the 1.2131 mark, meeting immediate resistance at 1.2160 and 1.2196 marks along with a support mark of 1.2085. Formation of candles beneath the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. Industrial Production and German Buba Monthly Report will remain in highlights. Let’s wait to trade a breakout setup during the European or the U.S. session today. 

GBP/USD – Daily Analysis

During Monday’s Asian trading session, the GBP/USD currency pair managed to stop its previous week’s bearish bias and refresh the intra-day high around above the mid-1.3300 level, mainly due to reports suggesting that the UK PM. Boris Johnson and the European Commission (E.C.) President Ursula von der Leyen agreed to extend the Brexit talks for one more week, which eased fears of a no-deal Brexit and contributed to the currency pair gains. On the other hand, the broad-based U.S. dollar fresh weakness, backed by the market risk-on mood, also played its major role in underpinning the currency pair. At a particular time, the GBP/USD currency pair is currently trading at 1.3325 and consolidating in the range between 1.3291 – 1.3354.

It is worth recalling that the U.K. Prime Minister Boris Johnson and European Commission President announced that they discussed the key issues and decided to go for another round of discussions to reach a historic trade deal, which in turn, boosted the sentiment around the British Pound and contributed to the currency pair gans. In contrast, the British PM Johnson repeats, “I’m afraid we’re still very far apart on some issues.” However, this negative statement failed to leave any meaningful impact on the Pound. 

Despite the lingering doubts about global economic recovery and the intensifying tension between the world’s two biggest economies, the market players continue to cheering the optimism over a possible vaccine for the highly infectious coronavirus disease. These hopes were fueled after the U.S. Food and Drug Administration’s (FDA) officially approved the Pfizer-BioNTech covid vaccine for emergency use. However, the positive developments over the covid vaccine keep favoring the market risk-on mood. Apart from this, the global equity market was further supported by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members keep working to give the much-awaited stimulus package ahead of this Friday’s deadline. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. 

As in result, the broad-based U.S. dollar failed to stop its bearish bias and remained depressed on the day. Moreover, the doubts over the global economic recovery from COVID-19 remains on the card. That was witnessed by the U.S. previous week’s downbeat U.S. data. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair higher. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

Conversely, the intensifying coronavirus woes in the U.K. and the U.S. and intensifying lockdown restrictions keep challenging the upbeat market performance and become the key factor that kept the lid on any additional gains in the currency pair. As per the latest report, the U.S. and U.K. policymakers were forced to impose the local lockdowns once again. In the meantime, Germany also extended national activity restrictions. 

Looking forward, the market traders will keep their eyes on the developments surrounding the Brexit story for some significant direction in the pair. Furthermore, the updates covering the virus and the US-China tussle will also be key to watch.

Daily Technical Levels

Support   Resistance

1.3338       1.3466

1.3280       1.3536

1.3209       1.3594

Pivot point: 1.3408

GBP/USD– Trading Tip

The GBP/USD is trading at the 1.3313 level, holding below an immediate resistance level of 1.3322. On the upper side, the GBP/USD pair can lead to a 1.3390 level, and support stays at 1.3269, which is extended by a double bottom level. Selling bias seems dominant; therefore, we should be looking for a sell trade only upon the violation of the 1.3265 level. The lagging technical indicators like 50 EMA suggest selling bias. Thus we should look for selling trades below 1.3400 and upon breakout 1.3265 level too.   

USD/JPY – Daily Analysis

During Monday’s Asian trading session, the USD/JPY currency pair failed to gain any positive traction. They witnessed some modest selling moves near below the 104.00 level, mainly due to the upbeat market sentiment, which tends to undermine the safe-haven U.S. dollar and contributes to the currency pair losses. However, the market trading sentiment was supported by the optimism about the coronavirus treatment and progress in the U.S. stimulus talks. Simultaneously, the market’s upbeat mood weakens the safe-haven Japanese yen, which could be considered one of the key factors that help the currency pair limit its deeper losses. In contrast, Japan’s Tankan data for the 4th-quarter (Q4) marked upbeat figures, which boosted the Japanese yen’s sentiment and contributed to the currency pair losses.  

At the data front, Tankan Large Manufacturing Index for Q4 grew from -27 to -10, against expectations of -15, while the Non-Manufacturing Index increased from -6 market consensus to -5 during the stated period. Moreover, Tankan Large Manufacturing Outlook and Non-Manufacturing Outlook also recorded upbeat numbers of -8 and -6 respectively, against -11 and -7 forecasts in that order.

Despite the lingering doubts over the U.S. economic recovery and the escalating tension between the world’s two biggest economies, the market players continue to cheer the optimism over a potential vaccine for the highly dangerous coronavirus infection. These hopes were fueled after the U.S. Food and Drug Administration’s (FDA) officially approved the Pfizer-BioNTech covid vaccine for emergency use. In turn, the New York Times got help to say that the White House staff members will be among the first to be vaccinated. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and contributed to the currency losses by undermining the safe-haven U.S. dollar.

Apart from this, the global equity market upticks were further fueled by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members keep working to give the much-awaited stimulus package ahead of this Friday’s deadline. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. 

This, in turn, the broad-based U.S. dollar failed to stop its bearish traction and edged lower on the day. Moreover, the doubts over the U.S. economic recovery from COVID-19 remains on the card, as witnessed by the U.S. previous week’s downbeat U.S. data. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

The rising tensions between the United States and China keep challenging the market risk-on tone and might suffer the currency pair into deeper losses. It’s also questioning the market risk-on mood could be the intensifying coronavirus woes in the U.K. and U.S., which leads to the intensifying lockdown restrictions. 

Daily Technical Levels

Support   Resistance

104.04       104.41

103.86       104.60

103.67       104.78

Pivot Point: 104.23

USD/JPY – Trading Tips

During the previous week, the USD/JPY violation of the symmetric triangle pattern at 104.346 faked out as the safe-haven currency pair reversed trade within the same triangle pattern. The current trading range of the USD/JPY pair remains 104.375 – 103.650, and violation of this range can extend the selling trend until the next support area of 103.200 level. Typically, such a triangle pattern can breakout on either side; this, we should be careful before opening any trade. The market is neutral as investors seem to wind up their positions ahead of the December holidays. Good luck

Categories
Forex Videos

Forex Trading Algorithms Part 3-Converting Trading Strategy To EA’s & Elements Of Computer Language!

https://youtu.be/8Ijzx2ePYkY

https://youtu.be/8Ijzx2ePYkY


Trading Algorithms – The Elements of a Computer Language – Part I

 

A computer language is a formal language to convert our ideas into a language understandable by a computer. Along with computing history, languages have evolved from plain ones and zeroes to assembly language and up to the high-level languages we have today.

Assembly language

Assembly language is a direct link to the computer’s CPU. Every assembly instruction of the instruction set is linked to a specific instruction code to the CPU.  

Fig 1. The basic structure of an X86 CPU. Source cs.lmu.edu

The CPU characteristics are reflected in the instruction set. For instance, an X86 CPU has eight floating-point 80-bit registers, sixteen 64-bit registers, and six 16-bit registers. Registers are ultrafast memories for the CPU use. Thus every register has assembly instructions to load, add, subtract, and move values using them. 

Fig 2- Example of assembly language

source codeproject.com

A computer program developed in assembly language is highly efficient, but it is a nightmare for the developer when the project is large. Therefore, high-level languages have been created for the benefit of computer scientists.

The Elements of a high-level language

A modern computer language is a combination of efficient high-level data structures, elegant and easy-to-understand syntax, and an extensive library of functions to allow fast application development.

Numbers

A computer application usually receives inputs in the form of numbers. These come in two styles: integer and floating-point. Usually, they are linked to a name called “variable.” That name is used so that we can use different names for the many sources of information. For instance, a bar of market data is composed of Open, High, Low, and Close. We could assign each category the corresponding name in our program.

Integers correspond to a mathematical integer. An integer does not hold decimals. For instance, an integer division of 3/2 is 1. integers are usually used as counters or pointers to larger objects, such as lists or arrays.

A floating-point number is allowed to have decimals. Thus a 3/2 division is equal to 1.5. All OHLC market data comes in floating-point format.

Strings

A string is a data type to store written information made of characters. Strings are used as labels and to present information in a human-understandable form. Recently, strings are used as input in sentiment-analysis functions. Sentiment analysis 

Boolean

Boolean types represent true/false values. A true or false value is the result of a question or “if” statement. It can also be assigned directly to a variable, such as in

buyCondition = EURUSD.Close[0] > 1.151

In this case, buyCondition is False for EURUSD closes below 1.151, and is True when the close value is higher than 1.151.

Lists 

We usually do not deal with a single number. If we want to compute a 20-period moving average of the USDJPY pair’s Close, we would need its last 20 closes. To store these values, the language uses lists (or arrays in C++). A list is an ordered collection of values or other types of information, such as strings.

Since Lists are ordered, we can refer to a particular element in the list using an index. For instance, if we were to retrieve the candlestick Close two bars ago of the USDJPY, we would ask for USDJPY.Close[2]

Sets

A Set is an unordered collection of elements. Sets do not allow duplication of elements. That means it eliminates duplicate entries. Not all languages have built-in Sets, although it can be made through programming if needed.

Dictionaries

Dictionaries are a useful data type that maps a key to a value. For instance, in Python 

tel = {‘Joe’: 554 098 111, ‘Jane’: 660 413 901} 

is a telephone structure. To retrieve Joe’s phone, we would write:

mytel = tel[‘Joe’]

with mytel holding 554 098 111

As with sets, not all high-level languages have built-in dictionaries, but a savvy programmer is able to create one.

 

In the next video of this series, we will explain the elements for flow control.

 

Categories
Forex Videos

Forex Trading Algorithms Part 2 Converting Trading Strategy To EA’s! From Ideas To Code!

https://youtu.be/UrtDB2Em4Zo

https://youtu.be/UrtDB2Em4Zo


Trading Algorithms -From Ideas to code

 

As we have already said, computers are dumb. We need to explain to them everything. Moreover, digital computers are binary. They only understand ones and zeroes. Nothing else. 

Compilers and interpreters

To make our lives easier, we have created interpreters and compilers, able to translate our ideas into binary. Basically, both do the same job. Compilers produce a binary file that a computer can later execute, whereas interpreters translate each instruction as it comes in real-time.

From idea to the algorithm

Usually, traders think about when to enter and exit trades. An example brought by George Pruitt in his book The Ultimate Algorithmic Trading System Toolbox is the following. A trader wanted a code to enter the market and told him: 

” Buy when the market closes above the 200-day moving average and then starts to trend downward and the RSI bottoms out below 20 and starts moving up. The sell-short side is just the opposite.” 

No computer would understand that. In this case, the idea was partially defined, though: To buy when the price was above the 200-day SMA, and the RSI crosses down below 20. But what did he mean by “downward trend”? or “starts moving up”?

Pseudo-code

The first step to make a trading algorithm is to create an approximation to the code using plain English, but with more concise wording.

In the example above, Pruitt says that he could translate the above sentence into the following pseudo-code after some calls to his client:

The number inside brackets represents the close x days before the current session; thus, [1] is yesterday’s close.

In the pseudo-code, close below close[1] and close [1] below close [2] and close[2] below close[3] is the definition of a downtrend. But we could define it differently. What’s important is that a computer doesn’t know what a downtrend is, and every concept needed for our purposes should be defined, such as a moving average, RSI, and so forth.

The code

The next thing we need to do is move the pseudo-code to the actual code. There are several languages devised for trading. MT4/5 offers MQL4/5, which are variants of C++, with a complete library for trading. Another popular language is Easylanguage, created by Tradestation, which is also compatible with other platforms, such as Multicharts. Another popular language among quants is Python, a terrific high-level language with extensive libraries to design and test trading systems.

The code snippet above creates a Python function that translates the above code idea. In this case, the myBuy function must be told the actual asset to buy ( which should point to the asset’s historical data), and it checks for a buy condition. If true, it will return a label for the buy and the level to perform the buy, the next open of the asset in this case.

Systematic or discretionary?

The steps from idea to pseudo-code to code is critical. If you do not have a working algorithm, there is no way you could create a systematic trading system. But this is only the beginning. Creating a successful automated trading system is very hard and involves many developing, testing, and optimizing cycles. The market shifts its condition, and not always your system will perform. Then, you have to ask yourself if you’ll endure the drawdown stage until the market comes in sync with the system again.

Some systematic traders think that the best way to attack the market is to have a basket of uncorrelated trading systems, which are in tune with the market’s different stages: low-volatility trend, high-volatility trend, low-volatility sideways, high-volatility sideways, so your risk and reward is an average of all of them.

In the coming videos, we will dissect the steps to create an automated trading system. Stay tuned!

Categories
Forex Elliott Wave Forex Technical Analysis

EURGBP Soars!, More Gains Ahead?

The EURGBP cross soared on Friday session, surpassing the psychological 0.92 barrier, advancing until the target area forecasted in our previous short-term analysis (here.)

The EURGBP cross soared on Friday session, surpassing the psychological 0.92 barrier, advancing until the target area forecasted in our previous short-term analysis (here.)

The EURGBP cross soared on Friday session, surpassing the psychological 0.92 barrier, advancing until the target area forecasted in our previous short-term analysis (here.)

Technical Overview

Our previous analysis discussed the completion of the complex corrective formation identified as a double-three pattern of Minute degree labeled in black, which began on last September 11th at 0.92916 and finished on November 11th at 0.88610. Likewise, after the double-three completion, the cross completed the wave B of Minor degree identified in green.

Once the EURGBP found the bottom at 0.88610, the cross began a rally corresponding to wave C. We have seen in our previous analysis the price completed wave ((ii)) at 0.88667 on November 23rd. After this completion, both the breakout of the descending trendline of the second wave in black and the strong bullish long-body candlestick formation developed in the November 27th session confirmed the start of the third wave in black.

Technical Outlook

During the last trading session of the week, the short-term Elliott wave view for the EURGBP cross exposed in the following 8-hour chart reveals the acceleration in its advance, which surpassed the supply zone between 0.92008 and 0.92181, finding resistance at 0.92298.

The impulsive upward movement observed during Friday’s session allows us to distinguish the completion of the wave ((iii)) at 0.92298 and the beginning of the fourth wave of the same degree.

In this context, the current corrective formation identified as wave ((iv)) in black could decline until the previous supply zone between 0.90686 and 0.90446, where the cross could find fresh buyers. Once the fourth wave completes, the cross should advance in a new rally corresponding to wave ((v)), which would be subdivided into a five-wave sequence. The potential target for the end of wave C is within the next supply zone between 0.92568 and 0.92916.

In summary, the EURGBP cross appears moving in an incomplete wave C of Minor degree, which, in its lesser degree count, shows the beginning of the fourth wave in black. This corrective formation could decline until the previous supply zone is located between 0.90446 and 0.90686. The cross, then, could find fresh buyers expecting the continuation of the trend that would push up the price toward the supply zone between 0.92568 and 0.92916.

Lastly, the invalidation level for this bullish scenario can be found at 0.90031.

Categories
Forex Elliott Wave Forex Market Analysis

EURNZD Consolidates after Bouncing from its Recent Lows

The EURNZD cross is seen consolidating near the extreme bearish sentiment zone backed by the strength of the New Zealand dollar. This consolidation suggests a pause of the downward sequence that began on August 20th and ended heavily oversold after its latest decline that drove it to 1.69472.

The EURNZD cross is seen consolidating near the extreme bearish sentiment zone backed by the strength of the New Zealand dollar. This consolidation suggests a pause of the downward sequence that began on August 20th and ended heavily oversold after its latest decline that drove it to 1.69472.

The EURNZD cross is seen consolidating near the extreme bearish sentiment zone backed by the strength of the New Zealand dollar. This consolidation suggests a pause of the downward sequence that began on August 20th and ended heavily oversold after its latest decline that drove it to 1.69472.

Technical Overview

The following 12-hour chart illustrates the short-term markets participants’ sentiment bounded by the 90 high and low range, which shows the price consolidating in the extreme bearish sentiment zone after the cross found support on 1.69472 on November 24th.

Furthermore, the previous chart shows the primary trend outlined a blue trend-line that tells the bias remains mostly bearish. Likewise, the secondary trend represented with the green trend-line exposes the downward acceleration, and, shows also its consolidation range between the levels of 1.69472 and 1.72664.

Finally, as long as the EURNZD cross keeps moving below level 1.72664, the bias will remain bearish, so we could expect further drops, likely below 1.69472. Whereas, the breakout of the extreme bearish zone of 1.72664 to the upside could indicate the start of a recovery.

Short-term Technical Outlook

The short-term outlook for the EURNZD cross under the Elliott Wave perspective is shown in the next 2-hour chart and seen moving in an incomplete downward sequence. The current leg in which is moving corresponds to the wave ((c)) of Minute degree labeled in black.  Within that wave ((c)), the price is advancing in its fourth wave of Minuette degree identified in blue.

 

We see all that the wave ((c)) of Minute degree labeled in black came after the completion of the wave ((b)), which ends on 1.80212 where the cross found fresh sellers dragging it in an accelerated bearish movement. In this context, the current wave ((c)) should develop an internal structure of five waves.

Right now, the chart shows the action is happening in its fourth wave, in blue, which could be advancing in its internal wave b of Subminuette degree identified in green. This leg could possibly test November’s lows. Likewise, considering that the third wave, in blue, looks like an extended wave, the fourth wave should be complex in price, time, or both. Therefore, the current corrective wave could continue evlving likely until early 2021.

Concerning the fifth wave, in blue, and considering that the third one of the same degree was the extended movement, there are two potential scenarios for the cross:

  • First scenario: the cross fails in its downward sequence finding fresh buyers above the end of the third wave, in blue, at 1.69472.
  • Second scenario: the cross penetrates below 1.69472, creating a new lower low. In this case, this new leg down could continue until the psychological barrier of 1.68.

In summary, the EURNZD cross currently moves in a corrective formation in the extreme bearish sentiment zone. In this context, our principal bias remains neutral until the completion of the fourth wave in blue. Once the cross ends the current consolidation, we could seek short positions following the direction of the fifth wave. Finally, the invalidation level of the bearish scenario locates at 1.73606.

Categories
Forex Signals

AUD/USD Violates Upward Channel – Brace for a Buying Trade 

The AUD/USD pair was closed at 0.75350 after placing a high of 0.75296 and a low of 0.74254. The Australian Dollar rose to its highest level in two and a half year as investors started to bet on a successful vaccine roll-out and improving global growth. The risk-sensitive Aussie gained as much as 0.8% on Thursday and rose to its highest since June 2018 as the market’s risk sentiment improved. The pair AUD/USD has gained about 6.8% this year as a rebound in China’s economy has boosted China-proxy Australian Dollar demand.

The AUD/USD pair was closed at 0.75350 after placing a high of 0.75296 and a low of 0.74254. The Australian Dollar rose to its highest level in two and a half year as investors started to bet on a successful vaccine roll-out and improving global growth. The risk-sensitive Aussie gained as much as 0.8% on Thursday and rose to its highest since June 2018 as the market’s risk sentiment improved. The pair AUD/USD has gained about 6.8% this year as a rebound in China’s economy has boosted China-proxy Australian Dollar demand.

The AUD/USD pair was closed at 0.75350 after placing a high of 0.75296 and a low of 0.74254. The Australian Dollar rose to its highest level in two and a half year as investors started to bet on a successful vaccine roll-out and improving global growth. The risk-sensitive Aussie gained as much as 0.8% on Thursday and rose to its highest since June 2018 as the market’s risk sentiment improved. The pair AUD/USD has gained about 6.8% this year as a rebound in China’s economy has boosted China-proxy Australian Dollar demand.

The risk sentiment in the market was supported by the combination of multiple factors on Thursday and supported the upward trend in the Australian Dollar. The rising hopes for the US stimulus bill after the US Treasury Secretary Steven Mnuchin that a lot of progress has been made regarding the stimulus talks added in the risk sentiment. Meanwhile, the US House Speaker Nancy Pelosi also said that bipartisan negotiations on the coronavirus relief bill were making great progress. These comments reflected the upbeat market mood and supported the risk perceived Australian Dollar.

On the other hand, the US dollar was also weak on Thursday that also supported the upside momentum in AUD/USD pair. The US dollar weakness was driven by the increased unemployment claims and additional stimulus from ECB on Thursday. 

At 05:00 GMT, the MI Inflation Expectations for November remain flat at 3.5% on the data front. From the US side, at 18:30 GMT, the CPI for November rose to 0.2% against the projected 0.1% and supported the US dollar. The Core CPI for November also increased to 0.2% against the forecasted 0.1% and supported the US dollar. The Unemployment Claims from last week raised to 853K against the anticipated 723K and weighed on the US dollar that added gains in AUD/USD pair. Furthermore, the hopes that the US FDA will approve within days using Pfizer’s vaccine also supported the risk sentiment in the market and gave strength to the risk perceived Aussie that ultimately added in the gains of AUD/USD pair.

The rising hopes for quick global economic growth also supported the market’s risk flows after the ECB announced on Thursday that it would expand its bond-buying program by nine months. It also raised the stimulus measure by 500 billion euros that will provide support to the Eurozone economy through the coronavirus pandemic. These updates also supported the risk-sensitive Aussie and helped the pair reach its multi-years highest level on Thursday above 0.7500.


Daily Technical Levels

Support Resistance

0.7403 0.7486

0.7362 0.7528

0.7320 0.7569

Pivot point: 0.7445

Entry Price – Buy 0.75374

Stop Loss – 0.74974

Take Profit – 0.75774

Risk to Reward – 1:1

Profit & Loss Per Standard Lot = -$400/ +$400

Profit & Loss Per Micro Lot = -$40/ +$40

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Categories
Forex Market Analysis

USD/CAD Approaching Trendline Resistance – Can We Setup a Sell Limit?

The USD/CAD pair was closed at 1.27385 after placing a high of 1.28288 and a low of 1.27064. The USD/CAD pair fell a day before after placing gains for three consecutive days amid the broad-based US dollar weakness and the rising crude oil prices. On Thursday, the USD/CAD pair fell to its lowest since April 2018 after the US dollar became weak across the board. The greenback suffered as its rival currency raised on Thursday amid the release of further stimulus measures from ECB. 

The USD/CAD pair was closed at 1.27385 after placing a high of 1.28288 and a low of 1.27064. The USD/CAD pair fell a day before after placing gains for three consecutive days amid the broad-based US dollar weakness and the rising crude oil prices. On Thursday, the USD/CAD pair fell to its lowest since April 2018 after the US dollar became weak across the board. The greenback suffered as its rival currency raised on Thursday amid the release of further stimulus measures from ECB. 

The USD/CAD pair was closed at 1.27385 after placing a high of 1.28288 and a low of 1.27064. The USD/CAD pair fell a day before after placing gains for three consecutive days amid the broad-based US dollar weakness and the rising crude oil prices. On Thursday, the USD/CAD pair fell to its lowest since April 2018 after the US dollar became weak across the board. The greenback suffered as its rival currency raised on Thursday amid the release of further stimulus measures from ECB. 

The ECB extended its bond-buying scheme and issued further stimulus measures on Thursday to support the Eurozone economy from the coronavirus pandemic. The additional support from ECB raised the hopes of the quick economic recovery of the Eurozone economy. It supported the single currency Euro that ultimately added weight to the US dollar. The US dollar was also under pressure as Congress has still not issued a second round of stimulus packages due to Democrats and Republicans’ stalemate over the size of the package. The weak US dollar added weight to the USD/CAD pair on Thursday.

Meanwhile, the Crude oil prices rose by 4.4% to above the $47.7 level on Thursday, and it was the highest level in months. The rising risk sentiment in the market related to vaccine optimism and quick global economic recovery with the release of stimulus measures from big nations added that energy demand would rise, and it supported the Crude oil prices.

On Thursday, the rising crude oil prices added strength in the Canadian dollar that ultimately weighed on the USD/CAD pair and added in its losses.

On the data front, at 18:30 GMT, the CPI for November advanced to 0.2% against the forecasted 0.1% and supported the US dollar. The Core CPI for November also raised to 0.2% against the anticipated 0.1% and supported the US dollar. The Unemployment Claims from last week rose to 853K against the estimated 723K and weighed on the US dollar added in the losses of the USD/CAD pair.

The US dollar was also weak because of the higher unemployment claims last week due to the state governments’ rising number of restrictive measures. The weak US dollar supported the bearish trend in the USD/CAD pair on Thursday. Furthermore, a Deputy Governor of the Bank of Canada, Paul Beaudry, said that the central bank was monitoring rising housing prices on Thursday. It kept the interest rates low to help the borrowers cope with the coronavirus pandemic. 

Beaudry said that BoC had lowered borrowing costs so that homebuyers can better carry the monthly burden of mortgages. He added that before a bank increases the interest rates, it wants everyone to work on a sustainable basis and the economy back to full capacity. He also stated that a whole set of businesses was on the edge of falling over due to the second wave of coronavirus, although there have not been too many bankruptcies. These comments from Beaudry added strength to the Canadian dollar and weighed on the USD/CAD pair.


Daily Technical Levels

Support Resistance

1.2775 1.2843

1.2738 1.2872

1.2708 1.2910

Pivot point: 1.2805

The USD/CAD pair is trading with a bullish bias today at the 1.2778 level, holding below an immediate resistance level of 1.2800. The resistance level is extended by a downward trendline, which suggests odds of selling bias in the market. On the lower side, the support stays at the 1.2722 level while the 50 periods EMA also holds around the 1.2836 level suggesting bearish bias in the market. The MACD is crossing over into the bullish zone, suggesting odds of buying trend continuation in the market. That’s why we are not entering the market right now. Let’s wait for the market to test and close below the 1.28300 area, and then we can take a sell trade. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, December 11 – Top Trade Setups In Forex on Friday! 

On the news front, eyes will remain on the German Final CPI m/m, which are expected to remain unchanged, and it may not drive any major movement in the market. BOE Gov Bailey is due to hold a press conference about the Financial Stability Report in London. Euro Summit also remains in highlight as the heads of state from the European Union countries are due to discuss the banking union and the capital markets union in Brussels.

On the news front, eyes will remain on the German Final CPI m/m, which are expected to remain unchanged, and it may not drive any major movement in the market. BOE Gov Bailey is due to hold a press conference about the Financial Stability Report in London. Euro Summit also remains in highlight as the heads of state from the European Union countries are due to discuss the banking union and the capital markets union in Brussels.

On the news front, eyes will remain on the German Final CPI m/m, which are expected to remain unchanged, and it may not drive any major movement in the market. BOE Gov Bailey is due to hold a press conference about the Financial Stability Report in London. Euro Summit also remains in highlight as the heads of state from the European Union countries are due to discuss the banking union and the capital markets union in Brussels.

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

The EUR/USD closed at 1.21215 after placing a high of 1.21588 and a low of 1.20633. After falling for four consecutive days, the EUR/USD pair rose on Thursday amid the European Central Bank’s latest decision.

On Thursday, the European Central Bank held its interest rates on its main refinancing operations at 0.00%, marginal lending facility at 0.25%, and the deposit facility at -0.50%. ECB said that it would continue to monitor the exchange rate’s developments about their possible implications for the medium-term inflation outlook.

The European Central Bank expanded its massive monetary stimulus program by another 500 billion euros as the second wave of lockdown measures weighed on the euro area’s economic recovery. It also expanded the emergency bond purchases scheme for nine months worth 1.85 trillion euros and aimed to keep firms and governments afloat until the economy was ready to re-open.

Central Bank also announced that it would hold the interest rates at the same level until the inflation outlook comes close to its below 2% target. The additional support to the Eurozone economy from ECB added that the Eurozone economy will now recover quickly. These hopes added strength in the single currency Euro that helped EUR/USD pair to post gains on Thursday. Meanwhile, on the Data front, at 12:45 GMT, the French Industrial Production for October raised to 1.6% against the expected 0.4% and supported the single currency Euro. From the U.S. side, at 18:30 GMT, the CPI for November rose to 0.2% against the estimated 0.1% and supported the U.S. dollar. The Core CPI for November also raised to 0.2% against the expected 0.1% and supported the U.S. dollar. The Unemployment Claims from last week rose to 853K against the forecasted 723K and weighed on the U.S. dollar that added strength in the EUR/USD pair on Thursday.

The U.S. dollar was also weak on Thursday as the Unemployment claims rose from their expected level during last week due to increased restrictive measures in the U.S. and supported the EUR/USD pair’s upward trend. Furthermore, the U.S. dollar came under more pressure after releasing additional stimulus by the European Central Bank. The U.S. lawmakers were also unable to sort out disagreements over aid to state and local governments, holding up a broader spending package. The U.S. dollar weakness added further support to the upward momentum of the EUR/USD pair.

Daily Technical Levels

Support   Resistance

1.2044       1.2133

1.2006       1.2186

1.1954       1.2223

Pivot point: 1.2096

EUR/USD– Trading Tip

The technical side of the EUR/USD continues to remain the same as the pair is trading at 1.2103 level, facing immediate resistance at 1.2160 and 1.2196 level along with a support level of 1.2085. Closing of candles below the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. Euro Summit will remain in highlights, and the choppy session is expected until the release of the event.

 

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.32900 after placing a high of 1.34108 and a low of 1.32453. The GBP/USD pair declined on Thursday as the meeting between PM Boris Johnson and E.U. Commission President Ursula von der Leyen failed to bridge major gaps between them.

PM Boris Johnson offered his ministers to prepare for the strong possibility of a no-deal Brexit. He said that the E.U.’s current offer was unacceptable because the U.K. could not be treated like its twin. He added that the deal offered by the E.U. was not sensible and was unlike any other free trade deal. He said that it was a way of keeping the U.K. locked in the E.U.’s regulatory orbit.

Johnson added a strong possibility that they would have a solution that will be much more like an Australian & Canadian relationship with the E.U. However, after the meeting, the PM Boris Johnson and E.U. Commission President Ursula von der Leyen agreed that a firm decision should be taken about the future of the talks by Sunday. The talks between the E.U.’s top negotiator Michel Barnier and the U.K.’s top negotiator David Frost will resume Brussels. Whereas, Foreign Secretary Dominic Raab said that it was unlikely the negotiations would be extended beyond Sunday.

At 05:30 GMT, the RICS House Price Balance from the U.K. raised 66% against the estimated 64% and supported British Pound. At 12:00 GMT, the Construction Output in October declined to 1.0% against the expectations of 1.2%. The Gross Domestic Product from Great Britain in October remained flat with expectations of 0.4%. The Goods Trade Balance from the U.K. showed a deficit of -12.0B against the forecasted -9.6B and weighed on British Pound and added losses in the GBP/USD pair. The Index of Services for the quarter also dropped to 9.7% against the expected 9.8% and weighed on Sterling and added further losses in GBP/USD pair. The Industrial Production in October surged to 1.3% against the expected 0.3% and supported British Pound. The Manufacturing Production for October also raised to 1.7% against the projected 0.3% and supported British Pound. 

At 18:30 GMT, the CPI for November surged to 0.2% against the anticipated 0.1% and supported the U.S. dollar that added pressure on GBP/USD pair. For November, the Core CPI also rose to 0.2% against the anticipated 0.1% and supported the U.S. dollar and added losses on GBP/USD pair. The Unemployment Claims from last week increased to 853K against the anticipated 723K and weighed on the U.S. dollar.

Moreover, the E.U. outlined contingency measures for a no-deal Brexit that reflected significant uncertainty whether a deal would be in place on January 1, 2021. This also raised the expectations that a Brexit deal might not be reached and weighed on GBP/USD pair on Thursday.

Daily Technical Levels

Support   Resistance

1.3338       1.3466

1.3280       1.3536

1.3209       1.3594

Pivot point: 1.3408

GBP/USD– Trading Tip

The GBP/USD is trading at the 1.3313 level, holding below an immediate resistance level of 1.3322. On the upper side, the GBP/USD pair can lead to a 1.3390 level, and support stays at 1.3269, which is extended by a double bottom level. Selling bias seems dominant, therefore, we should be looking for a sell trade only upon the violation of 1.3265 level. The lagging technical indicators like 50 EMA is suggesting selling bias, thus we should look for selling trades below 1.3400 and upon breakout 1.3265 level too.   

 

USD/JPY – Daily Analysis

The USD/JPY was closed at 104.212 after placing a high of 104.577 and a low of 104.139. The USD/JPY pair rose in the early trading session on Thursday amid the rising risk sentiment in the market after the stimulus measure from ECB and the vaccine optimism. On Thursday, an independent committee of experts recommended the U.S. Food and Drug Administration to approve the use of Pfizer and BioNtech’s coronavirus vaccine for people over the age of 16. It will be up to the FDA to decide whether to follow the recommendation or not. The agency is anticipated to announce its decision within days, and if it decides to approve the vaccine, then the health care workers could begin receiving the shots almost immediately.

The vaccine optimism in the U.S. raised the risk sentiment in the market as the chances for vaccine approval raised the chance for quick economic recovery and weighed on the safe-haven Japanese Yen, which ultimately added gains in the USD/JPY pair. The European Central Bank announced expanding its debt purchases scheme and further stimulus measures that also added in the market’s risk sentiment and supported the upward trend in the USD/JPY pair after weighing on the safe-haven Japanese Yen.

However, the USD/JPY pair failed to hold its gain on Thursday and started to decline as the U.S. Unemployment claims from last week raised to their highest since September 19 level. The rise in Americans’ jobless claim benefits was due to the states’ increased restrictive measures that halted economic activities. The raised unemployment claims weighed on the U.S. dollar and dragged the USD/JPY pair on the downside. 

On the data front, at 04:50 GMT, the BSI Manufacturing Index for the 4th quarter raised to 21.6 from the expectations of 3.5 and supported the Japanese Yen and weighed on the USD/JPY pair. The Producer Price Index from Japan came in line as expected -2.2%.

From the U.S. side, at 18:30 GMT, the CPI for November rose to 0.2% against the projected 0.1% and supported the U.S. dollar. The Core CPI for November also raised to 0.2% against the estimated 0.1% and supported the U.S. dollar. The Unemployment Claims from last week rose to 853K against the forecasted 723K and weighed on the U.S. dollar that made the USD/JPY pair to lose all of its gains on Thursday.

Daily Technical Levels

Support   Resistance

104.04        104.41

103.86        104.60

103.67        104.78

Pivot Point: 104.23

USD/JPY – Trading Tips

The USD/JPY violation of the symmetric triangle pattern at 104.346 faked out as the safe-haven currency pair reversed trade within the same triangle pattern. The current trading range of the USD/JPY pair remains 104.375 – 103.650, and violation of this range can extend the selling trend until the next support area of 103.200 level. Typically, such a triangle pattern can breakout on either side; this, we should be careful before opening any trade. The market is neutral as investors seem to wind up their positions ahead of the December holidays. Good luck

Categories
Forex Signals Uncategorised

EUR/AUD: The Bear Making a Run Again

EUR/AUD has been bearish for the last two days. The pair made a bullish correction on the 15M chart to start its trading day. Then, it made a breakout at yesterday’s lowest low at 1.60920 and had a bounce at 1.60600. The price then consolidated within these two levels. Upon producing a doji candle followed by a bearish engulfing candle the pair made a breakout at the level of 1.60600. An entry has been triggered right after the breakout candle’s closing at 1.60472. The price may make a bearish move up to the level of 1.60472. However, it may find its next support around 1.60080. We may consider taking a partial profit at that level depending on its bearish momentum.

Trade Summary:

Entry: 1.60472

Stop Loss: 1.60872

Take Profit: 1.59372

The risk for the trade per standard lot is $ 300.14, Mini lot $ 30.01 and Micro lot $ 3.00. The risk-reward is 1:2.75. Thus, the reward for the per standard lot is $825.38, Mini lot $ 82.53 and Micro lot $ 8.25.

Categories
Forex Videos

Forex Trading Algorithms Part 1-Converting Trading Strategy To EA’s & Running Tests On Profitability

https://youtu.be/s7GUG6CpXPg

https://youtu.be/s7GUG6CpXPg

Trading Algorithms –  An Introduction

 

Almost all traders, novices and pros alike, know at least the basics of technical analysis. Still, not many know how to convert a trading idea into a set of rules and then test them for profitability.  This video series aims to be an introduction to algorithms applied to trading. Even if you are not considering creating one EA or trading bot, we think it is very interesting to be proficient in converting your trading idea into formal code and test it. We will use mostly pseudo-code, but also python, a very easy-to-learn but powerful high-level language, and Easylanguage, developed by Tradestation, which is almost as pseudo-code because it was designed to be read as a natural language.

 

What is an algorithm?

An algorithm is a set of rules to perform a task in a finite number of steps. Basically, an algorithm is a recipe.

 

For example, if we were to create an algorithm to make a phone call manually. A possible solution could be this :

1.- Open the phone
2.- select the keyboard
3.- dial each number from left to right
4.- Click the green phone icon
5.- Hear the calling sound

6.- Busy tone?
    A- no ---> wait  60 seconds for the answer.
        Did somebody answer?
                Yes--> Start a conversation
                    I - Conversation ended?
                            Yes --> Hang up.
                No --> Hang up
    B- Yes ---> Wait 120 seconds and go to 4th step

Algorithms  used in Trading

There are many ways to create Trading algorithms, including advanced sentiment analysis, evaluating the words used in trading forums and news releases. Still, we will focus on algorithms for historical price action data series.

 The ability to create, test, and evaluate a trading algorithm is a terrific ability to own. This allows creating market models that map and profit from the market’s inefficiencies. If you happen to find one set of rules that historically made profits, it could likely continue making profits in the future. This is the basic premise of automated algos, expert advisors, and trading bots.

 

Algorithm properties

  • Inputs: zero or more values can be externally supplied. Some algorithms don’t need inputs, although the majority will, and of course, a trading algorithm will need to get timely data from the market to generate outputs.
  • Outputs: at least one result should be delivered. That is logical. The output may not only be a text. It can be a picture, a sound, or a market trading order.
  • Unambiguous: Each instruction must be explicit, with a single meaning.
  • Finite: It ends after a limited number of steps.
  • The algorithm should precisely specify what the computer should do. The computer is not smart. It is dumb. You should tell it precisely the action it has to make.
  • Effective: Every instruction should be basic enough to be made by hand or uses other algorithmic sub-units with the same property. Of course, the action must be feasible, which means the computer can perform that action because the instruction is included in the instruction set of the programming language you’re using.

The key to a good algorithm, as with recipes, is to break the ideas down into simple building blocks.

Flow Diagrams

Algorithms can be more complicated than a simple recipe. Besides, a recipe is interpreted by a (supposedly) intelligent cooker. On the other hand, algorithms are to be interpreted by brainless CPUs. Besides, algorithms usually accept a stream of data inputs, which must be transformed until an output or output is produced.  Flow diagrams are a pictorial representation of the algorithm’s process and data flow.

A Flow diagram is a very handy tool to develop your ideas into coherent algorithms because it helps you spot potential flaws and improvements and should be the first step before proceeding to the actual code.

 

In the next chapters, we will continue developing this basic idea, applied to trading, using trading examples.

 

Further reading:

The Ultimate Algorithm Trading Toolbox, by George Pruitt.

 

Categories
Forex Videos

Forex Position Sizing Part 12 – Two Tier Optimal F Part 2

https://youtu.be/FH-ML6MHDn8

https://youtu.be/FH-ML6MHDn8


Position Sizing XIII- Two-Tier Optimal f Part II

 

In Two-Tier Optimal f part I, we discussed the virtues and drawbacks of optimal f trading. In this part II video, we will present a methodology that will almost ensure that our initial capital is preserved with the possibility of astonishing growth factors on our trading account. This content is exclusive, and, so far, you will not see it explained elsewhere.

 

System requirements:

This methodology is valid only with profitable strategies. This method is not a miracle solution for losing systems.

It works best when the risk is homogeneous. That is, the dollar risk is a constant R factor to the rewards.

The better the system, the higher the and smoother are the rewards.

 

The Two-tier Strategy

1.- We split the trading account un two portions. One portion ( 25% of the total in our case) will be used with Optimal f positioning. The other part will be applied to a 1% risk positioning.

2.- After a determined goal (2X, 5X, 10X, 20X of the Opt-f portion), the account will be rebalanced ( by adding both sub-balances together) and then re-split(25%-75%) to start a new cycle. The cycle will also reboot itself if the Opt-f section’s balance goes below 25% of the value at the beginning of that cycle.

 

What was the procedure to test the two-tier Opt-f position system?

We took the current Signal Table closes signals and created two 10K trading histories of what would have been one year of trading activity. Thus, resulting in two collections of 10,000m years of trading data. One of the collections was to be used with the Optimal f position sizing portion, and the other one was employed in the 75%-portion of the account. The Python code for the entire simulation is shown below.

We did this procedure using several targets for the balance of the portion traded using Opt-f: 2X, 5X, 10X, and 20X. We focused the results on the following parameters: Average final capital, max final capital, min final capital, average trades need to 10X total capital appreciation, average max drawdown, The drawdown with 1% probability of occurrence. In the below table, we also present the results of the 1% risk and 100% Opt-f strategies. ( click the image to enlarge).

 

 

Discussion

We see that the 1% risk strategy is not bad at all since it can multiply by five the initial balance in one year. It does this with an average max drawdown of 8.79 percent, with the odds of reaching a 16.2% drawdown on one every 100 years. We see also that, on average, it needs 664 trades to multiply by ten the initial capital.  

On all two-tier columns, we see a remarkable fact that the min final capital is 10,486. That meant that in all the 10K years of simulated market action, not a single one ended below the initial 10K balance. Thus, this strategy seems to protect us against the loss of the initial capital. That is a terrific psychological reinforcement to withstand the high max drawdowns it presents.  The use of the 2X goal is the best choice for the less bold investors, as this method offers an average max drawdown of 38.32%, with a 1% chance of reaching 59% drawdown.  After one year, the average final capital is $8.5 million, with a starting capital of only 10K.  This positioning strategy multiplies by ten the capital, on average, every 113 trades. The second best choice is a 5X goal.  That will more than double the yearly returns at the expense of a near 50% drawdown on average.   On the table, we can see that the more we increase the goals to rebalance, the more the account growth, but also the max drawdown.

We can see that these strategies’ growth is orders of magnitude lower than fully Optf position sizing. Still, the attractiveness of this strategy is that the odds of being smaller than 10K after one year of trading are virtually none.

More ideas

We used 1% as the size used in 75% of the total capital in the preceding trading sizing proposals. Of course, we could modify that to better profit from the total capital with almost no increase in drawdown and fully preserving our initial capital. You can make your own simulations on this to find the best fit for you. As examples, let’s present three more simulations using Optf/10, Optf/ 5, and Optf/2 with 2X rebalancing goals. 

 

In the image above, we see that using Optf/5 in 75% of the capital will deliver huge profits with 40%-63% Drawdown figures and 79 trades to 10X capital appreciation. All this with almost no chance to blow up the account. 

Final words

This video shows exclusive and never taught position sizing methodologies that protect the initial capital and offer vastly superior results to the 1% risk standard methodology.  But you must be aware that we are assuming the trading strategy is effective long term. The trader will also need to find the safest optimal f value by performing the proper computer simulations.

That also shows that position sizing is part of a trading system that really helps you achieve your monetary objectives. And for optimizing it, you need to know the optimal f of the system you’re using.

Of course, the market will limit the trading size we can reach without influencing it, but as theory, these methodologies are real wealth multipliers for the serious trader.

To employ a two-tier methodology in the real market, you will need to be fully organized, have an appropriate spreadsheet to follow the trade results, have two split balances, and compute the size of the coming positions.

Categories
Forex Course

189. Summary – Trading The News

What did we learn till now? 

What did we learn till now? 

What did we learn till now? 

Sometimes in the forex market, the movement of prices seems random. In the previous series of courses, we have shown that most of the randomness you observe can be explained. By now, you should be capable of identifying the various news releases published daily. You should also be able to determine which currency pairs the news release is likely to impact.

In this final course, we’ll recap all that we have learned so far.

When it comes to news trading, a forex trader can either have a directional bias to trading or have a non-directional bias. For directionally biased traders, they have to:

  • Familiarise themselves with the economic calendar to know when economic indicators are scheduled for release
  • Understand the impact that each indicator might have and which currency pairs are best to trade
  • Understand that the analysts’ consensus or expectations are what determines if the news release is negative, positive, or in-line
  • Know which news releases to avoid trading

On the other hand, forex traders who have a non-directional bias do not necessarily need to familiarise themselves with these conditions. Such traders only need to know two things.

  • The scheduled release of economic indicators, speeches by influential people, and significant geopolitical events
  • Whether the upcoming event is of a high or low impact

Traders with a non-directional bias only concern themselves with the magnitude of the price movement after an event – not the direction. That is why they adopt the straddle strategy.

The straddle strategy uses forex stop orders, which triggers long or short positions if the market significantly moves in either direction. The buy stop order will trigger a long trade if the news release results in a bullish market. With the sell stop order, s short sell will be executed if the news release results in a bear market.

Remember to be careful when trading the news. Always keep an eye on the prevailing macroeconomic trends and geopolitical events. The overall market sentiment can sometimes amplify or dampen the impact of a news release.

If, for example, moments before the release of UK manufacturing data, the market receives news that the ongoing Brexit negotiations have hit a snag. If the manufacturing data is positive, its impact on the market will be dampened; if the release is negative, its impact will be magnified. All the best.

Categories
Forex Signals

Gold Signal Hit Take Profit – Risk-off Sentiment In Play! 

The yellow metal prices managed to stop its previous day losing streak and took some modest bids around well above the $1,830 level mainly due to the broad-based U.S. dollar weakness, which tends to underpin the gold prices as the price of oil is inversely related to the price of the U.S. dollar. However, the sentiment around the U.S. dollar was being pressured by the optimism over the coronavirus vaccine and the probability of U.S. economic stimulus measures, which urge investors towards riskier currencies and higher-yielding assets against the safe-haven asset.

The yellow metal prices managed to stop its previous day losing streak and took some modest bids around well above the $1,830 level mainly due to the broad-based U.S. dollar weakness, which tends to underpin the gold prices as the price of oil is inversely related to the price of the U.S. dollar. However, the sentiment around the U.S. dollar was being pressured by the optimism over the coronavirus vaccine and the probability of U.S. economic stimulus measures, which urge investors towards riskier currencies and higher-yielding assets against the safe-haven asset.

The yellow metal prices managed to stop its previous day losing streak and took some modest bids around well above the $1,830 level mainly due to the broad-based U.S. dollar weakness, which tends to underpin the gold prices as the price of oil is inversely related to the price of the U.S. dollar. However, the sentiment around the U.S. dollar was being pressured by the optimism over the coronavirus vaccine and the probability of U.S. economic stimulus measures, which urge investors towards riskier currencies and higher-yielding assets against the safe-haven asset.

Across the pond, the downbeat market trading sentiment, driven by the worsening coronavirus (COVID-19) conditions in the U.S. and Europe, also keeps the gold prices well bid. Apart from this, the equity markets’ losses were further bolstered by the US-China tussle, which eventually lends some additional support to the yellow metal prices. On the contrary, the optimism over a possible vaccine and treatment for the highly infectious coronavirus keeps challenging the market risk-off mood, which might cap further upside momentum for the gold prices. The yellow metal prices are currently trading at 1,836.17 and consolidating in the range between 1,833.80 – 1,842.54.

However, the global markets’ sentiment failed to extend its previous-day positive performance and turned sour amid renewed Sino-US tensions and growing coronavirus fears. As per the latest report, America blacklists the Chinese crime boss and some other diplomats from Beijing in an anti-corruption sanction crackdown, which instantly fueled the Sino-US tension and weighed on the market trading sentiment. In addition to this, the U.S. and Europe still not refraining from imposing back-to-back lockdown, which threatening to undermine economic recovery as lockdown restrictions tend to have an instant negative effect on economic activities. In the meantime, the lingering uncertainty over the Brexit trade talks also exerted downside pressure on the global equity market. Thus, all these factors weigh on the market trading sentiment, which could be considered the main factors for the gold on-going bullish moves.

Despite the risk-off-market sentiment, the broad-based U.S. dollar failed to stop its previous session declining streak and remained bearish on the day as doubts persist over the global economic recovery from COVID-19. Furthermore, the U.S. Federal Reserve’s expectations of further monetary easing also weigh on the U.S. dollar. Besides this, the encouraging data from COVID-19 vaccine developers urge investors towards riskier currencies and higher-yielding assets against the safe-haven asset, which eventually leads to losses in the safe-haven U.S. dollar. However, the U.S. dollar losses become the key factor that kept the gold prices higher as the price of oil is inversely related to the price of the U.S. dollar. Meantime, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies dropped to 91.052.

In contrast, the losses in the global risk sentiment were capped by the latest reports suggesting that the U.S. Food and Drug Administration (FDA) will meet later in the day to talk about BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy). While Canada also approved its first COVID-19 vaccine on Wednesday and said inoculations would start next week, which also helps the market sentiment limit its deeper losses.


Daily Support and Resistance

S1 1838.47

S2 1853.58

S3 1861.99

Pivot Point 1868.69

R1 1877.1

R2 1883.8

R3 1898.91

Gold prices dropped amid the greenback’s strength versus another important trading instrument in the nonexistence of any further U.S. fiscal incentive to support the rollback within the coronavirus pandemic. Gold is currently trading at the 1,836 mark, facing immediate resistance at the 1,851 level along with a support level of 1,828 and 1,824. The U.S. Inflation data may help determine further gold trends now; nonetheless, the technical side seems bearish today.

Categories
Forex Signals

AUD/USD Bullish Channel Underpins – Signal Outlook!

The AUD/USD pair is trading with a bullish bias at the 0.7486 level, heading upward until the next target level of 0.7520 level. The risk-sensitive AUD experienced following Britain’s top medical expert urged people with notable allergies to not utilize the coronavirus vaccine from Pfizer and BioNtech as it will give them an unfavorable response. This information came in after two people were advised to have drastic consequences from coronavirus vaccine usage.

The AUD/USD pair is trading with a bullish bias at the 0.7486 level, heading upward until the next target level of 0.7520 level. The risk-sensitive AUD experienced following Britain’s top medical expert urged people with notable allergies to not utilize the coronavirus vaccine from Pfizer and BioNtech as it will give them an unfavorable response. This information came in after two people were advised to have drastic consequences from coronavirus vaccine usage.

The AUD/USD pair is trading with a bullish bias at the 0.7486 level, heading upward until the next target level of 0.7520 level. The risk-sensitive AUD experienced following Britain’s top medical expert urged people with notable allergies to not utilize the coronavirus vaccine from Pfizer and BioNtech as it will give them an unfavorable response. This information came in after two people were advised to have drastic consequences from coronavirus vaccine usage.

This news deteriorated the risk sentiment and weighed on risk-sensitive Aussie that made the AUD/USD pair to lose some of its early daily gains. The rising number of coronavirus cases in the US surpassed the 15M daily on average; about 200,000 people were reported as positive for coronavirus infection in the US. These pandemic developments faded hopes for quick economic recovery despite vaccine development progress and weighed on the US dollar that added gains in the AUD/USD pair.

Meanwhile, China’s macro-economic data was also released on Wednesday but failed to give a decisive move to the pair AUD/USD as the data gave mixed results. The CPI from China dropped to -0.5% against the expected 0.0% and weighed on China-proxy Aussie. The PPI from China dropped less than expectations of -1.8% at -1.5% and supported the China-proxy Aussie. The New Loans from China dropped to 1430B from the expected 1450B and weighed on China-proxy Aussie that capped further gains in the AUD/USD pair on Wednesday.


Daily Technical Levels:
Support Resistance
0.7401 0.7478
0.7366 0.7520
0.7323 0.7555
Pivot point: 0.7443

On the technical front, the AUD/USD is trading bullish at the 0.7487 level, facing next resistance near 0.7485. The bullish moves can prolong the buying trend to the next resistance area of 0.7525 level in the higher direction. On the 4 hour timeframe, the AUD/USD has developed an upward channel that holds the buying trend. Thus we have begun a buying trade in the AUD/USD pair today.

Entry Price – Buy 0.74844
Stop Loss – 0.74444
Take Profit – 0.75244
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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